Why cap and trade is not enough: Adding performance standards to climate policy

In a recent policy brief, "Cap and Trade is Not Enough: Improving U.S. Policy" we argue that if we are going to make the large-scale low-carbon investments needed to reduce GHGs by 50-80% by mid-century, we'll need to add and strengthen performance standards in the electric power, building and appliances, and transportation sectors. Wait- won't a cap and trade or carbon tax alone provide the right incentives to move toward a low-carbon economy? Of course, if there are no restrictions, limitations or interventions (see the joke: "Consider a spherical cow").

However most climate bills have "cost containment or safety valve" measures, which don't allow CO2 permit prices to rise quickly or substantially. In fact, a recent budget resolution amendment in the U.S. Senate that stated that carbon legislation should not increase electricity or gasoline prices passed 89-8. With cheap carbon prices in the next decade or two, we will likely not see the types of large-scale low-carbon power plants investments (e.g. renewables, fossil with carbon capture and sequestration, and nuclear) required for big GHG reductions. Also, a small carbon price might not change the way we make or use the buildings and appliances that we'll keep around for a long time. Oh, and for transportation, since a $10/ton GHG price translates to about a 10 cent increase in the price per gallon (even while conservatively assuming tax incidence fully on the consumer), that likely won't change what kinds of cars we buy and how far we drive them (remember the carbon math).

So given any cap and trade program we are likely going to have will likely have cheap carbon prices, our policy brief outlines what we can add to cap and trade policies to help get to where we need to be. Here's a summary:


In addition to instituting a cap and trade regime, Congress should simultaneously design, integrate and implement these targeted strategies:

1. For electric power:

• A tradable carbon emission portfolio standard (CPS) that gradually reduces the average amount of CO2 emitted per kW-hour for the electricity that companies sell to end users;

• Promotion of strategies that separate utility profit from the amount of electricity it sells so that utilities can earn profit from increasing energy efficiency;

2. For buildings and appliances

• Higher and more inclusive efficiency standards for building design and construction, appliances, equipment, and lighting;

• Federal incentives to induce localities to adopt building codes that lower the annual energy use in new buildings by at least 50% compared to conventional buildings;

3. For automobiles

• Efficiency standards that at least double miles per gallon of automobiles and light trucks over current vehicles (CAFE) and include tradable credits for alternative vehicles like plug-in hybrids, and EVs while promoting life cycle low-carbon transportation fuels;

• Reduce the number of miles driven with road pricing, pay-as-you-drive insurance, and by encouraging transportation alternatives.

Some of these measures are attempted in similar forms in the Waxman-Markey discussion draft. By coupling standards such as these along with market mechanisms for GHG reductions, climate policy can begin to take an integrated approach and make strides toward achieving low-carbon objectives.

Resources:
Samaras, C., Apt, J., Azevedo, I.L., Lave, L.B., Morgan, M.G. and Rubin, E.S., 2009. Cap and Trade is Not Enough: Improving U.S. Climate Policy. Department of Engineering and Public Policy, Carnegie Mellon University. [summary] [full paper]

Apt, J., Keith, D., and Morgan, M.G., 2007. Promoting Low-Carbon Electricity Production. Issues in Science and Technology. Spring Issue. [html]

Our new plug-in hybrid study: Buy small, charge often

OK, so you want to buy a plug-in hybrid. How much battery capacity do you pay for if you want to save gasoline, GHGs, and money? Does the extra battery weight bring down my mpg or vehicle efficiency? What set of policies or prices would change things? We have a new paper on plug-in hybrids that will appear in the journal Energy Policy that starts the discussion on these issues. Our paper, led by Professor Jeremy Michalek and with Design Decisions Laboratory Ph.D. Candidate C.S. (Norman) Shiau as the first author, looks at the tradeoffs between larger battery capacity and how often one charges the car to try to identify how these impact overall PHEV goals (e.g. reductions in gasoline, GHGs, and cost). Read the summary of findings here.

A very large PHEV battery would allow you to drive on electricity for long distances between charging. So if you have a 15-mile commute each way, a PHEV with a battery big enough to drive 30 miles (PHEV30) on electricity would get you to work and back on electricity (more or less). But what if you didn't charge one evening or needed to run a bunch of errands after work and drove more than 30 miles. Then that large battery in the trunk is weighing you down, reducing mpg when your car is driving like a regular hybrid. We found that as the battery size increases from a PHEV7 to a PHEV60, gallons of gasoline needed per mile went up 8% and electricity needed per mile went up 10%.

This is why the distance between charging is so important. If you can get by with a smaller battery, you'll not only save on the upfront battery costs, but on the day-to-day fuel and electricity costs as well. We found that for urban drivers who charge every 10 miles or less, small PHEVs (like a PHEV7) would be the best choice to minimize gasoline, GHGs, and total costs. If you charge every 20-100 miles, a PHEV would result in fewer GHGs but HEVs would be more cost effective. To minimize GHGs, you want to be driving on electricity most of the time, which implies charging your plug-in every 10 miles if you have a PHEV10, every 20 miles with a PHEV20, and so on. But because of the impacts of battery weight, a PHEV7 charged every 10 miles or so will emit fewer GHGs per mile than a PHEV30 charged every 30 miles. Large PHEVs minimize GHGs if frequent charging isn't possible. Figures 4, 5 and 6 in the paper show how the best options for gasoline, GHG and cost reductions change as the distance between charging increases.

Of course, studies like these are only as good as the assumptions, so we analyzed conditions that could change the original results. So what would make moderate-sized PHEVs more cost effective? Things that we would expect: cheaper batteries and/or expensive gas. It's interesting to note that even a $100/tonne carbon tax doesn't make a PHEV20 cheaper than an ordinary hybrid, unless your electricity is already low-carbon. Also, increasing battery specific energy to 140 Wh/kg doesn't help that much, implying we might want policy to focus more on getting batteries cheaper than getting them lighter.

The current PHEV tax credits appropriately scale with battery size, however support for public charging stations would help urban drivers charge more frequently and get by with smaller batteries. While we would rather PHEVs were charged at night to use spare power plant capacity and avoid stressing the grid, perhaps public or workplace charging stations could be programmed to have high prices during afternoon peaks (or alternatively not operate at all for a few hours during summer peaks). But from a consumer standpoint, to minimize fuel use, GHGs and cost with PHEVs, remember: buy small, charge often.


Source:
Shiau, C.-S, C. Samaras, R. Hauffe and J.J. Michalek (2009) "Impact of battery weight and charging patterns on the economic and environmental benefits of plug-in hybrid vehicles," to appear, Energy Policy. Link to Preprint version.

Some media stories about this study: Bloomberg News, Green Car Congress, HybridCars.com

New Research: Using real options to make plug-in hybrids competitive

Derek Lemoine sent along a new working paper, "Valuing plug-in hybrid electric vehicles' battery capacity using a real options framework". The paper proposes using a new way to value PHEVs, using real options, rather than the traditional method of seeing if the fuel savings will pay for the extra battery cost (i.e. discounted cash flow). A new method is probably needed; with the price of oil plunging, many worry if consumers are as willing to pay for newer efficient technology.

The paper argues that because PHEV owners have the choice to drive on either gasoline or electricity, they are purchasing this "opportunity" (designated a strip of call options) when they shell out extra money for a PHEV storage battery. This opportunity has real value, but is not considered if you are just adding up fuel savings vs. capital costs, so including the real options analysis makes batteries look more attractive. But, the paper cautions that PHEVs might not be competitive even including this extra value, unless gasoline is expensive for the long-term or battery prices come down beyond what has been predicted with large-scale production. While the paper estimates that GHG abatement with PHEVs may still be over $100/ton CO2-eq, it also argues including PHEVs in the fleet has an additional value that needs to be considered- constraining GHGs from transportation in the future.


Source:
Lemoine, D., Valuing plug-in hybrid electric vehicles' battery capacity using a real options framework. USAEE Working Paper 08-015. (December 31, 2008).

A Jolt to the Economy

Uncle Sam, infrastructure is finally ready for its close-up. Faced with a deepening recession, President-elect Obama has indicated that major infrastructure investments will be a highlight of his economic stimulus plan. This couldn’t have come at a better time – the upkeep of our roads, bridges and power grids has coasted on fumes for decades. Politicians love to open a new bridge, but paying for repairs doesn’t quite provide the same political pizzazz.

So we are finally going to fix our infrastructure, but where should we start to both quickly create jobs through “shovel ready” infrastructure investments and begin a transformation to a greener economy? Besides the obviously needed agenda of fixing bridges that are dangerous, upgrading our crumbling sewer systems, and improving mass transit, I have one word for you: outlets.

No, not the stores offering after-holiday bargains, but ordinary household electrical outlets. The unassuming wall outlet is your connection to a power plant, but it represents a path to the future. General Motors and others have promised widespread deployment of cars powered mostly by batteries charged from these outlets rather than gasoline. Cheaper, advanced batteries could usher in a new era of electrified transportation and reduce greenhouse gases, air pollution and our dependence on foreign oil.

But where would you charge the battery?

A recent nationwide survey by the University of California-Davis found that about half of drivers could identify an outlet near where they park their car at home. But the circuit breaker has to have enough capacity dedicated for vehicle charging, and older houses might need an upgrade. Then there is the other half of drivers that don’t have outlets, and the fewer than 5 percent of respondents who found a charging location at work. Driving on electricity doesn’t require a lot of infrastructure compared to say, the refueling stations needed for hydrogen fuel cells. But at a minimum, it requires an outlet.

If President-elect Obama wants to put thousands of electricians and laborers, who have been hit hard with the downturn in construction, back to work, he should focus on outlets. An infrastructure stimulus program could get workers out to homes, apartment building garages and other parking spaces to install outlets, make the necessary electrical upgrades, and certify these areas are ready for plug-in hybrids. If we are lending money to GM to help them make electric cars, putting in outlets might help sell them, and maybe increase the chance of us getting paid back.

Installing these outlets could be an easy add-on to a program that some utilities are doing anyway- replacing existing electrical meters with new “smart meters”. These will provide data on energy use once an hour, instead of once a month like the old meters. Empowered with this information, consumers can make educated choices on how to save energy, and utilities can make the grid more reliable. Not all utilities have committed to rolling out smart meters, and an increased incentive through the stimulus program would hopefully get more onboard.

This program could be a good first step, but we also have to commit to upgrading and greening our century-old power grid. To get serious about the threats from climate change, we need to begin scale replacement of our aging power fleet with renewable energy and plants that can capture and store their carbon emissions. Further, while electricity demand has been going up in the past three decades, we have built hardly any transmission lines and neglected our distribution system. This has caused the electrical equivalent of a traffic jam. In order to ramp up the amount of renewables in the system, we need more transmission lines connecting remote areas of the country where the wind and sun are strongest to population centers where we need the electricity. Large-scale renewable energy requires improved infrastructure and a smarter grid that can manage demand, and a plug-in hybrid in your garage could eventually help incorporate more renewables by storing some of the energy. Creating a 21st century energy system will be a large-scale integrated undertaking, but we can start right now with the outlets.

Using the economic stimulus program to couple the installation of vehicle charging outlets and smart meters makes a lot of sense. It would put people back to work immediately and upgrade household electrical systems. But it would also lay the groundwork for a smarter grid, energy efficiency investments and widespread adoption of plug-in hybrids or other electric vehicles. When the recession is history and we are starting to repay the expenditure, we would be proud of this program: This was money that stimulated the economy but also gave us an investment for the future. Having all of those outlets and meters installed would be a real bridge to somewhere.

Constantine Samaras is a Research Fellow in the Department of Engineering and Public Policy at Carnegie Mellon University


Resources:
Axsen, J., Kurani, K., 2008. The early U.S. market for PHEVs: Anticipating consumer awareness, recharge potential, design priorities and energy impacts. Institute of Transportation Studies, University of California, Davis.

Lemoine, D.M., Kammen, D.M., Farrell, A.E., 2008. An innovation and policy agenda for commercially competitive plug-in hybrid electric vehicles. Environmental Research Letters, 014003.

Kempton, W., Tomic, J., 2005. Vehicle-to-grid power implementation: From stabilizing the grid to supporting large-scale renewable energy. J. Power Sources 144, 280-294.

Samaras, C., Meisterling, K., 2008. Life Cycle Assessment of Greenhouse Gas Emissions from Plug-in Hybrid Vehicles: Implications for Policy. Environ. Sci. Technol. 42, 3170-3176.

John Holdren to be nominated to head the OSTP. So, what's the OSTP?

According to Eli Kintisch of Science Magazine and ScienceInsider, President-elect Obama will nominate Dr. John Holdren to be Science Advisor to the President and Director of the Office of Science and Technology Policy (OSTP). Holdren currently serves as the director of the Science, Technology and Public Policy Program and the Belfer Center for Science and International Affairs at Harvard's Kennedy School of Government, as well as Director of the Woods Hole Research Center.

The OSTP is, kind of a big deal. It acts within the Executive Office of the President to advise on the effects of science and technology on domestic and international affairs. The office deals with everything such as energy and climate change, health sciences, security, space technology, industrial competitiveness, education, and the list goes on. But probably most importantly at this time in history, the OSTP helps craft the U.S. research and development budget that the President puts forward. As many others and I have said, energy R&D has been lagging behind for quite some time. So if we are going to have a Manhattan or Apollo Project for energy, think of John Holdren as the person who will be advising the President on the technology bets.

This is good news, as Holdren, a past president and chairman of the board of directors of the American Association for the Advancement of Science (AAAS), has been a strong voice on taking action on climate change and for energy research. This past summer, he penned an op-ed in the Boston Globe titled, "Convincing the climate change skeptics". Hopefully, he and his team can hit the ground running in January. We wish him well on this exciting, challenging and imperative endeavor.

Resources:
Holdren, John P. "Science and Technology for Sustainable Well-Being." Science 319.5862 (January 25, 2008): 424-434.

Holdren, John P. "The Future of Climate Change Policy: The U.S.'s Last Chance to Lead." Scientific American 2008 Earth 3.0 Supplement. October 13, 2008, 20-21.

Holdren, John P., William K. Reilly, John Rowe, Jason Grumet, Marika Tatsutani, et al. "Energy Policy Recommendations to the President and the 110th Congress." National Commission on Energy Policy, April 9, 2007.

Research resources: Climate change, efficiency, and renewables policy databases

The IEA updated some of its very valuable policy databases this December, making them a good starting point for researchers trying to figure out what initiatives are planned or in place in IEA member countries, as well in countries such as China, India, Brazil, Russia, Mexico and South Africa.

• IEA Climate Policy Database
• IEA Renewable Energy Policy Database
• IEA Energy Efficiency Policy Database

The IEA has also maintained a decent database on what is spent on energy R&D here. And for U.S. national and state renewable and efficiency policies, another good resource is DSRIE.

Webinar On Energy Efficiency Supply Curves

My colleague Inês gave a webinar recently on her work on energy efficiency supply curves titled: "The US Energy Savings Potential and Who Pays for It". Watch the webinar for free here.

Energy use and CO2 emissions from the residential sector are distributed among a variety of household services, each of which may use different fuels at different intensities. Efficiency supply curves help policymakers determine where the low-hanging fruit are for GHG mitigation.

Abstract:

Several recent studies use bottom-up models to assess the potential for energy efficiency (or avoided emissions from greenhouse gases) and the costs of implementing such energy efficiency measure, representing these two dimensions in an energy efficiency supply curve. However, energy savings estimates are generally overly optimistic suggesting that the costs to achieve the energy efficiency potential are very low. We revisit the energy efficiency supply curve approach, developing a model that accounts for key uncertainties and different perspectives on how energy efficiency potential can be tackled. This model provides efficiency potential savings and associated costs for the US residential sector, accounting for:

• Different agents' perspectives (consumers, utilities/energy service companies, regulatory agencies) on the cost of efficiency
• Energy savings potential at census division level
• Different types of fuel uses
• The largest residential energy end-uses
• Market and implicit discount rates
• Different specification of fuel prices and carbon factors
• Several cost-effectiveness criteria to rank the most energy efficient options or cheapest climate mitigation options

Oil and the economy

Because the transportation sector currently relies so heavily on petroleum for energy (oil provides about 96% of U.S. transportation energy), oil price shocks have the potential to affect the wider economy. When it costs more to move things around (whether eggs or dirt or factory parts), prices go up. But can an oil shock cause a recession? In the review by Jones, Leiby, and Paik, the authors report that most research has found US recessions following oil price shocks are largely attributable to the oil price and could not have been avoided through monetary policy (i.e. even action by the Fed wouldn't help much in the face of high oil prices). The authors also state empirical data shows that oil price shocks result in reallocation of labor (e.g. from manufacturing) in the economy. Although the evidence appears convincing, the authors caution that it will remain difficult to isolate a single causal link for a recession (this is economist-speak for "yeah, a spike in the price of oil probably causes a recession, but we can't 100% prove it with the data") . Since the NBER recently announced that the U.S. has been in a recession since December 2007, I plotted real imported crude prices along with recessions since 1980 below.

Source: Jones, D.W., Leiby, P.N., Paik, I.K., 2004. Oil Price Shocks and the Macroeconomy: What Has Been Learned Since 1996. Energy Journal 25, 1-32.

Southern utility Entergy calls for $50/ton tax and dividend, and other news from the Energy Economics conference

At the U.S./International Association for Energy Economics (USAEE/IAEE) conference last week in New Orleans, Entergy, an energy company with more than 30,000 MW of capacity and more than 2.7 million electricity customers in Arkansas, Louisiana, Mississippi and Texas, called for a $50/ton CO2 tax and dividend program to address climate change. Their director of environmental programs gave a presentation during a conference lunch that spent a fair amount of time making the case for climate change policy, both from a scientific and risk management point of view. With the second largest portfolio of nukes, and a large share of natural gas-fired generation, Entergy is in a better position to handle such a tax than other energy companies. However, meaningful climate policy would not be able to happen without stakeholders like Entergy stepping up. What you do think? Does it matter that some utilities with lower carbon portfolios are calling for aggressive climate policies?

Other news from this conference:

• A House Energy and Commerce Committee professional staffer says that a nationwide RPS is likely to be passed (possibly on the order of 25%). He said that one of the people who had unresolved issues with a nationwide RPS was Senator Domenici, who has since retired and is being replaced with Senator-elect Udall. Udall was a chief proponent of a nationwide RPS while in the House. He also mentioned that there are two big issues still out there on climate policy (which we and a lot of others are working on): 1) What is the cap and how do you impose it; 2) How you account for life cycle carbon costs.
  
• NRDC attorney Brandi Colander gave a presentation on the successful elements of electricity and gas decoupling, and cited Arkansas as an example. Short answer: decoupling needs incentives/penalties aimed at increasing energy efficiency, as well as aggressive energy efficiency targets. More on decoupling issues and policy from RedBlog and the Regulatory Assistance Project.
• An Argonne National Laboratory model presented raised the issue of optimizing oil refinery performance for large displacements of either gasoline or diesel. For example, if large amounts of gasoline were avoided by PHEVs/EVs, biofuels, etc., but diesel wasn't reduced, then refineries would have excess production of gasoline on hand when they make all the diesel they need, since they are co-products. Get all that? They are saying that this might be an issue and refineries should research some solutions. Agreed.
• Finally, I gave a presentation that coupled a lot of Inês' work on residential efficiency supply curves with some things we've been looking into regarding transportation carbon reduction supply curves. We used data at the state and regional level to determine relative sizes of household (residential and passenger transportation) energy and CO2 footprints and how they differ. This can help us recommend effective energy and climate polices. The paper is called: "Better Cars or Better Appliances? Evaluating the Cost Effectiveness of U.S. Household Carbon Mitigation Strategies".

UN Report: Buildings and Climate Change; Energy Efficiency Policy Recommendations from the IEA

A few reports on energy efficiency and climate change that I came across recently are of interest. First, the UNEP has a report detailing life cycle GHG emissions from the residential and commerical buildings sector. The report states that buildings are responsible for about 40% of total GHGs, mostly from the building operations phase. Operations (or use phase) include direct combustion (heating, cooking, and hot water) and for services (all things in buildings powered by electricity). Several studies are cited that argue that building operations account for 80%+ of life cycle energy use, with construction and materials comprising the next largest share, and a final small piece for demolition.

The UNEP report identifies energy efficiency polices and barriers in several countries, which provide a framework for going forward. They recommend benchmarking (to help support global reporting), efficiency standards and other policies, technology transfer and awareness of the human behavioral aspects. Researchers will find the data, charts and references presented across various countries useful as a starting point for their own analyses.

In addition, the IEA recently released a report of 25 energy efficiency policy recommendations endorsed by the G8. If implemented, the report says that global CO2 emissions could be reduced by 20% (8+ Gt CO2) by 2030. Not bad, indeed.

Sources:
UNEP (2006). "Buildings and Climate Change: Status, Challenges, and Opportunities" UNEP DTIE, Paris.

IEA (2008). "Energy Efficiency Policy Recommendations: Worldwide Implementation Now" International Energy Agency, Paris.

M. Granger Morgan on how to Re-energize America

Last Sunday, in the Pittsburgh Post-Gazette, Granger Morgan (Carnegie Mellon University) drew his perspective on key priorities to promote a more sustainable US energy system.

Morgan suggested that the right incentives for private investment in more sustainable infrastructure and products; establish performance standards on appliances, buildings and cars; implement a carbon emission cap for power plants.

Furthermore, he advocates the creation of an appointed committee, which should pursue the following 3 tasks: 1) identify the most efficient and economical research and deployment opportunities in energy infrastructure; 2) understand where energy independence and climate policy align or not; 3) assess how to solve the structure problems in DOE.

Welcome to a new Sustainable Research contributor

Please welcome new Sustainable Research contributor Inês Lima Azevedo! Inês is finishing up her Ph.D. in Engineering and Public Policy at Carnegie Mellon, and we are glad to have her as a contributing blogger. Welcome!

Federal Tax Credit for Energy Efficiency

The "Energy Economic Stabilization Act of 2008" includes extended tax credits for energy efficiency home improvements. The summary of tax credits to homeowners is available here .

What's new in the EU: UK Carbon Permit Auction

"The first auction of carbon dioxide permits netted the government £54m ($80.9m) on Wednesday as bidders fought for the right to emit greenhouse gases."

Solar Thermal Promise

The "Daily Climate" provided today a nice overview of solar thermal.
Apparently the costs of a modern solar thermal plant would range the 12 to 18 cents$/kWh (PV today is around 40 cents/kWh). The idea is not new: it uses mirrors to concentrate/focus the sun's rays on pipes containing a heat-absorbing fluid. The hot fluid vaporizes the water, and the steam spins a generating turbine.

Sounds interesting, namely if coupled with storage, but still not competitive in comparison with wind or traditional fossil-fuel based generation.

Energy and environmental policy in the new administration

With a new administration comes a new energy and environmental policy. What are the main features of the plan proposed by President-elect Obama? We had some questions for the candidates last year on this topic, and hopefully this will be a critical priority for the new administration. You can read the proposed energy plan, environmental plan, and watch the video here, and below are some highlights.

• Establish a 100% auction greenhouse gas cap and trade program to reduce U.S. emissions to 80% below 1990 levels by 2050. "A small portion of the receipts generated by auctioning allowances ($15 billion per year) will be used to support the development of clean energy, invest in energy efficiency improvements, and help develop the next generation of biofuels and clean energy vehicles – measures that will help the economy and help meet the emissions reduction targets. It will also be used to provide new funding to state and federal land and wildlife managers to restore habitat, create wildlife migration corridors, and assist fish and wildlife to adapt to the effects of a warming climate. All remaining receipts will be used for rebates and other transition relief to ensure that families and communities are not adversely impacted by the transition to a new energy, low carbon economy."

• Create a $150 Billion fund over ten years to "accelerate the commercialization of plug‐in hybrids, promote development of commercial scale renewable energy, encourage energy efficiency, invest in low emissions coal plants, advance the next generation of biofuels and fuel infrastructure, and begin transition to a new digital electricity grid. The plan will also invest in America's highly‐skilled manufacturing workforce and manufacturing centers to ensure that American workers have the skills and tools they need to pioneer the green technologies that will be in high demand throughout the world."

This is important because below is a graph of what we dedicate currently to energy R&D (I used data from IEA):

• Increase vehicle fuel economy standards by 4% per year and put 1 million plug-in hybrids on the road by 2015. "Within one year of becoming President, the entire White House fleet will be converted to plug‐ins as security permits; and half of all cars purchased by the federal government will be plug‐in hybrids or all‐electric by 2012."

• Establish a national low-carbon fuel standard and construct alternative fuel infrastructure. Note to the President-elect on this one: a thorough, transparent account of life cycle impacts from fuel production and infrastructure investment is essential to this plan (and frankly, most of the energy plan). If you need any help, I know some people. :)
  

• 10% of electricity will come from renewables by 2012, and 25% by 2025. If this is not including hydropower (i.e. only using wind, solar, geothermal, maybe biomass), 10% by 2012 is fairly ambitious, and I'll hope for the best.

• Build 5 CCS demonstration projects.
  

• Deploy energy efficiency and establish building and appliance standards.

• Decouple electricity sales and profits, as is done in California and Vermont, to encourage an economically viable business model for energy efficiency from utilities in a carbon constrained world. This is huge and should be evaluated for feasibility immediately. Sean from Recycled Energy Development has a nice post arguing that decoupling in itself is not a panacea, and that add-ons to traditional decoupling programs are necessary to align consumer and utility incentives to be more efficient. He points to some excellent resources on decoupling from the Regulatory Assistance Project.
  

• Build more livable and sustainable communities. "...must devote substantial resources to repairing our roads and bridges. [... also believe that we must devote significantly more attention to investments that will make it easier for us to walk, bicycle and access other transportation alternatives. They are committed to reforming the federal transportation funding and leveling employer incentives for driving and public transit.
  

Map showing global commercial CCS projects released

One of the mitigation strategies for climate change is Carbon Capture and Sequestration (CCS, also called Carbon Capture and Storage), where the carbon emitted from power plants, iron and steel plants, and other fossil intensive operations is removed from the process before it gets to the atmosphere. For the 'everything you want to know about CCS but were afraid to ask-ers' out there, the IPCC Special Report on Carbon Capture and Storage gives any interested reader a good background on the technology and implications. If CCS is going to part of the solution, the myriad regulatory issues will have be worked out, which is what the CCSReg project is working on.

The Scottish Center for Carbon Storage has released a google maps-style database of all of the commercially significant CCS sites around the world, either planned, operational, or canceled. They define commercially significant as > 700,000 metric tons of CO2 per year of storage. That number is probably even a little low; one 500 MW coal plant would produce about 3-3.5 million metric tons of CO2 per year, using round numbers. But this database is a good start to keep informed about what's going on and where.

Chevy Volt Could Have 100 MPG EPA Rating

What is the MPG of an electric car? A subway train? A bicycle? 100? Infinity?

According to Motor Trend (via Detroit Free Press), GM and the EPA are trying to come to agreement on how to rate the MPG of the Chevy Volt, an extended range electric vehicle. (EREV). Since the Volt has a 40-mile electric range, GM argues that it will only use its tiny gasoline engine every once in a while (which it likely will for most consumers). The article says that the Volt could debut with a 100 mpg rating. I understand the need to communicate to consumers the benefits of this vehicle, but why 100? Why not 72 or 143.2? It all depends on how the test is constructed. When the vehicle is operating in electric mode only, it is getting infinity mpg, and is using grid energy in kWh per mile. Theoretically you could convert these kWh to the energy content of gasoline and back into some mpg, and maybe this is an option on the table. If you are not counting the electrical energy you are leaving out a big portion of what is used to make this car go. But if using a mixed electrical/gasoline mpg figure, a consumer sees a mpg rating that might reflect the energy use, but not the cost of driving, due to the favorable economics of driving on electricity vs. gasoline (excluding capital costs). So, it's complicated.

The problem is, that EREV and PHEV MPG (and kWh/mile for that matter) will vary considerably according to driving habits, battery and charging conditions, and operating environment. To stimulate innovation, I agree that the EPA should allow for a generous MPG rating, within reason. Similar to how automakers now get an alternative-fueled vehicle credit for Corporate Average Fuel Economy Standards when they make a vehicle capable to take E85 ethanol (which has minimal cost to make this upgrade) even if the vehicle never once gets filled up with E85 once it leaves the lot. This is an innovation and diffusion policy.

But eventually, how EREVs, PHEVs and other vehicles are rated in terms of MPG, CO2 and other pollutants/mile, and other common denominators matter--

Quick esoteric research tip: Converting CO2

Often when writing about climate change, we need to write CO2, CH4 or N2O or other symbols with subscripts. Instead of having to go to a toolbar and format each time, you can highlight the number you want to be a subscript and click "ctrl' and "=" (or command = for Macs) and voila, you've got a subscript. "Ctrl" "SHIFT" "=" gets you a superscript if you're into that. These shortcuts work in MS Office, but alas, not in blogger. There are plenty more keyboard shortcuts for Mac and Windows. I'm guessing Linux users are already using shortcuts, so you don't need a link...

Comparing costs and GHG emissions of using coal and natural gas as liquid fuels

If the U.S. has a goal of increasing its energy security, and at the same time significantly reducing its GHG emissions, new research argues that neither coal-to-liquids (CTL) nor gas-to-liquids (GTL) consumption seems like a reasonable path to follow. A new paper published in Environmental Science and Technology, shows that on a life cycle basis, CTL and GTL fuels would likely lead to considerable GHG emissions increases compared to petroleum-based fuels. The researchers confirmed that gasoline and diesel produced from coal could emit about double the GHG emissions of petroleum-based gasoline and diesel. If domestic natural gas were used to produce gasoline via GTL, or if natural gas-based gasoline were imported from Qatar or Malaysia, an increase in emissions of 20−25% would be seen. If LNG is used to make GTL, an increase of around 50% in emission factors for both gasoline and diesel could be observed.

In addition, the researchers argue the economic advantages of GTL fuels are not obvious. If oil is $120/bbl, then GTL fuels are not economical when natural gas is above $15/MCF. As oil price goes below $120/bbl, GTL looks less and less attractive economically and a carbon price doesn't move things around too much for GTLs. The authors argue that energy security is not enhanced with GTL fuels if shares of imported LNG (or GTL) are increased. CTL fuels, on the other hand, are generally cheaper than petroleum-based fuels. CTL is more economical than petroleum when oil is $120/bbl, and coal prices would have to go above $130/tonne for CTL's economic advantage to erode. A price on carbon generally begins to erode CTLs economic advantage over oil. Recent reports suggest there is some uncertainty about the availability of economically viable coal resources in the U.S. if consumption rates significantly increase, so if you are thinking about building a CTL plant, sensitivity analysis of how the economics change with higher coal prices and a price on carbon is warranted.

This paper basically says under the best possible assumptions (installing CCS on the CTL production plant to capture site emissions and then using exclusively low-carbon electricity to run that plant), life cycle GHGs of CTLs are about equal to today's gasoline and diesel. It's more likely that exclusively CCS and low-carbon electricity won't be used in the near term for CTL production, so CTLs could close to double GHGs compared to oil. Of course, whether or not CTL plants are built, CCS should be included as part of a low-carbon portfolio for electricity production if we are going to get close to an 80% reduction of GHGs.

Source: Jaramillo, P., Griffin, W.M., Matthews, H.S. (2008). Comparative Analysis of the Production Costs and Life Cycle GHG Emissions of FT Fuels Produced By Coal and Natural Gas. Environ. Sci. Technol. Available online 18 September 2008. DOI: 10.1021/es8002074. Supporting Online Information available here (no subscription req'd).

Our research on plug-in hybrids featured in Plenty Magazine

A write up about our life cycle study of plug-in hybrids is featured in the October/November issue of Plenty Magazine. The writer describes why we emphasize encouraging low-carbon electricity sources for plug-in hybrids, and they include a nice graphic representing our results (p. 39 in print in the Science section, but that content is not available online). Note that plug-ins are still better in terms of GHGs than regular gasoline-based cars, even when charged from coal. But things start to change when plug-ins are compared with regular hybrids, and we can achieve serious GHGs in transportation by transitioning to plug-ins charged by more and more low-carbon electricity in the mix.

Plenty is a fun New York-based green zine, that has some nice features and even better comics. Like this one:

Area man finishes coffee, thesis

Finishing off a very rewarding graduate school experience, I completed and submitted my dissertation, "A Life Cycle Approach to Technology, Infrastructure, and Climate Policy Decision Making: Transitioning to Plug-in Hybrid Electric Vehicles and Low-Carbon Electricity".

I am now a Post-Doctoral Research Fellow at the Climate Decision Making Center at Carnegie Mellon, and looking forward to continuing past research and beginning new directions. I hope to try to post about emerging research with at least slightly better frequency than the past few months...your help is always appreciated!

Up to a Third of China's Emissions are Embodied in Exports

A new study by Chris Weber, Glen Peters, Dabo Guan, and Klaus Hubacek estimates that up to a third of China's CO2 emissions are embodied in exports. The emissions calculations include both combustion of fuels and industrial processes in the supply chain to produce Chinese exports. So when you buy say, a hammer made in China, the CO2 created in making the hammer (combustion from electricity and steel production, etc.) is counted in China's emissions but the hammer ends up in your toolbox.

27% of China's export emissions are attributed to the U.S., 19% to the EU-27, 14% to the remaining Annex B countries, and 40% to the non-annex B developing world. The authors argue that regardless of who is responsible for these emissions, improvements to China's inefficient and coal-based electricity system would be good for everybody. Agreed.

Here is the abstract:

Within 5 years, China's CO2 emissions have nearly doubled, and China may already be the world's largest emitter of CO2. Evidence suggests that exports could be a main cause for the rise in Chinese CO2 emissions; however, no systematic study has analyzed this issue, especially over time. We find that in 2005, around one-third of Chinese emissions (1700 Mt CO2) were due to production of exports, and this proportion has risen from 12% (230 Mt) in 1987 and only 21% (760 Mt) as recently as 2002. It is likely that consumption in the developed world is driving this trend. A majority of these emissions have largely escaped the scrutiny of arguments over “carbon leakage” due to the current, narrow definition of leakage. Climate policies which would make the developed world responsible for China's export emissions have both benefits and costs, and must be carefully designed to achieve political consensus and equity. Whoever is responsible for these emissions, China's rapidly expanding infrastructure and inefficient coal-powered electricity system need urgent attention.


Source: Weber, C. L. , Peters, G.P., Guan, D., and K. Hubacek (2008). The Contributions of Chinese Exports to Climate Change. Energy Policy. Available online 21 July 2008. DOI: 10.1016/j.enpol.2008.06.009

A Dissertation Title

My dissertation has a working title: "A life-cycle approach to technology, infrastructure, and climate policy decision making: Transitioning to plug-in hybrid electric vehicles and low-carbon electricity". If you have any suggestions for a better title, let me know, and soon!

On being more Tigger than Eeyore

If for some reason your time on the internets has not included watching Randy Pausch's Last Lecture, it's worth doing. His lessons are timeless, including asking yourself if you are going to be a Tigger or an Eeyore. He died on Friday at the age of 47 after battling pancreatic cancer. I never knew Randy, and passed up the chance to watch the lecture in person a few hundred yards from my office last November, because I had to make charts and graphs. Go figure. A much lesser known lecture of his is on Time Management, which summarized his methods for getting (a lot of) things done, although I could never get my inbox down to zero messages as he suggests.

So, as Randy said, when faced with adversity, "Don't complain. Just work harder".