Summer 2009
Our Climate 2030 Blueprint, which shows how the right mix of policies and technologies can curb global warming while strengthening the U.S. economy, has helped shape the climate legislation currently being debated in Congress.
By Eric Misbach
Reducing oil dependence. Strengthening energy security. Creating jobs. Tackling global warming. Addressing air pollution. Improving our health.
These are just a few of the many reasons for the United States to transition to a clean energy economy. And the rapid growth of the renewable energy industry and strong sales growth of hybrid vehicles show that this transition is under way. These changes, however, are still too gradual to address our urgent need to reduce heat-trapping emissions to levels that are necessary to protect the well-being of our citizens and the health of our environment.
We are already experiencing some effects of global warming (including hotter summers and melting glaciers), and recent observations show these changes are occurring more quickly, and often more intensely, than scientists previously projected. To help avoid the worst of these effects, the United States must reduce its emissions of carbon dioxide and other heat-trapping gases at least 80 percent below 2005 levels by 2050. UCS has outlined a comprehensive set of smart policies that would jump-start these efforts, as described in our report Climate 2030: A National Blueprint for a Clean Energy Economy.
The results of this groundbreaking, peer-reviewed analysis using sophisticated modeling techniques show that the United States can deeply reduce heat-trapping emissions while saving consumers and businesses money. Our analysts used a modified version of the U.S. Department of Energy’s National Energy Modeling System to project the changes in energy use, emissions, and consumer and business energy costs resulting from a “cap-and-trade” program (which puts a price on carbon emissions) working in concert with complementary solutions that promote energy efficiency, renewable energy, lower-carbon transportation, and smart growth. No other study has taken this integrated approach, nor demonstrated the strong savings potential of this combined approach—more than $1.7 trillion in cumulative savings by 2030.
Working together, these solutions—our “Blueprint”—lower U.S. heat-trapping emissions emissions to meet a cap set at 26 percent below 2005 levels in 2020 and 56 percent in 2030 (see the chart below), putting us on track to meet the 80 percent by 2050 target. The economic results are equally impressive, with consumers and businesses reaping a net annual savings of $465 billion in 2030 (see below). Consumers alone would save more than $126 billion in 2030, or about $900 per U.S. household: $320 from lower electricity, natural gas, and heating oil costs, and $580 from lower transportation costs. What’s more, savings would be realized in every region of the country.
Less Is MoreA limited investment in “offsets” can help lower costs while still encouraging a clean energy transition. A cap-and-trade program can allow companies to comply with the emissions cap by “offsetting” a portion of their emissions—i.e., investing in carbon reduction or carbon storage projects elsewhere—rather than reducing their emissions directly. This helps polluters lower their cost of compliance, and allows companies and countries not officially participating in the program to contribute to emissions reduction efforts. However, offsets can also delay much-needed technological innovation and a rapid transition to these technologies (within sectors governed by the cap), potentially jeopardizing the program’s long-term emissions reduction goals. An effective cap-and-trade program should therefore allow only a limited amount of offsets, and any offsets allowed should be of high quality (i.e., they provide real emissions reductions above what would have happened under a business-as-usual scenario). The Blueprint assumed that a maximum of 15 percent of the emissions cap could be met with offsets: 10 percent from domestic forestry and farming initiatives that promote carbon storage in trees and soils, and 5 percent from reduced tropical deforestation. |
The Blueprint’s Building Blocks
Cap and trade. The linchpin of the Blueprint is an economywide cap-and-trade program that draws on the power of the marketplace to reduce carbon emissions in a cost-effective and flexible manner. First, a “cap” on emissions is established for all polluters, who must obtain permits for each ton of their emissions. Putting a price on emissions in this manner would encourage companies to find ways to cut back on their emissions and would reward innovations in clean technology. Polluters would also have the option to purchase a limited number of “offsets,” instead of purchasing carbon permits, for a small portion of their emissions (see “Less Is More” at right).
Ideally, all carbon permits would be auctioned, and the proceeds used for the public benefit. The energy model used in our analysis could not calculate the benefits of investing auction revenues for specific purposes, so we assumed all of the revenue would be recycled back into the economy in a general way. In practice, we recommend that most of the revenue be invested in energy efficiency and renewable energy, assistance to low-income consumers, transition assistance to workers in industries disproportionately affected by the cap, prevention of tropical deforestation, transfer of clean technologies to developing nations, and assistance for communities in adapting to unavoidable climate changes.
(Click here for larger version of chart.)
Energy efficiency. Powering, heating, and cooling our homes and businesses is one of the largest sources of carbon emissions, so making these activities more efficient is a key part of the Blueprint. The Blueprint examined multiple efficiency approaches in the buildings and industry sectors, including an energy efficiency resource standard (which requires retail electricity and natural gas providers to help their customers reduce energy use), federal energy efficiency standards for buildings and equipment, more efficient industrial processes, greater reliance on efficient combined-heat-and-power (CHP) systems (see “How It Works”) and increased research and development funding.
Lower-carbon electricity. Almost half of America’s electricity comes from burning coal. The resulting carbon emissions account for more than 40 percent of the U.S. total—making power plants the country’s greatest contributor to global warming. We can greatly reduce our reliance on fossil-fuel-based electricity by shifting to clean, renewable energy resources that are commercially available and ready to be deployed today, such as wind, solar, geothermal, and bioenergy.
The Blueprint includes a national renewable electricity standard (which requires utilities to obtain a percentage of their electricity from renewable resources), increased research and development funding for renewable energy technologies, and carbon capture and storage (CCS) demonstration projects at coal power plants.
Cleaner transportation. Transportation—commuting, traveling, and the shipping of goods—accounts for the second largest share of U.S. global warming emissions, increases air pollution, and makes our nation dependent on a highly volatile oil market. The Blueprint calls for a broad suite of transportation policies to help break this dependence, including standards that would improve engine efficiency for cars and trucks and require the use of low-carbon fuels such as cellulosic ethanol. We also recommend “smart growth” policies that reduce travel by encouraging mixed residential and commercial development with more public transit; “pay-as you- drive” insurance, which could reduce annual premiums and provide an incentive for driving less; and the use of plugin hybrids powered by renewable electricity.
Smart Policies Bring Big Results
Together, the Blueprint policies help meet our needed emissions reductions target in a cost-effective manner. Our results show that, by 2030, we can reduce overall energy demand by one-third; carbon-free electricity and low-carbon fuels help make up more than one-third of our remaining energy use. In addition, renewable electricity use is increased 25 percent. (Our analysis shows that hydropower and nuclear power will also contribute to carbon-free electricity at about the same levels they do today. But advanced nuclear and CCS play only a minor role through 2030 because they will not be economically competitive with other low-carbon electricity options.)
These policies translate to significant emissions cuts: power plant emissions are reduced 84 percent below 2005 levels by 2030, and transportation-related emissions are reduced 19 percent below 2005 levels. In addition, U.S. oil and petroleum consumption is reduced by 6 million barrels per day compared with 2005—as much oil as we currently import from OPEC (the Organization of Petroleum Exporting Countries). These reductions will cut projected expenditures on imports by more than $85 billion in 2030—or more than $160,000 per minute.
Because the Blueprint includes only those technologies that are commercially available today or likely to be available within the next two decades (see “Beyond 2030” on p. 8 for examples of excluded technologies), our emissions reduction estimates are conservative. Deeper reductions may be possible with more aggressive policies, more advanced technologies, or greater investments in both. Additionally, studies indicate that significant reductions could also be achieved via carbon storage. in U.S. agricultural soils and forests, but we were unable to analyze the full potential of this strategy.
Beyond 2030Our analysis did not include the following advanced technologies, which could reduce emissions even further.
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We Must Get Started Today
The Blueprint’s projected benefits cannot be fully realized unless some of the critical policies are put into place quickly—as soon as next year. Fortunately, we have an opportunity to start down the path to a clean energy future this year, as comprehensive climate and energy legislation moves through the U.S. House of Representatives this summer. UCS worked closely with the bill’s sponsors to craft some of its most effective aspects, such as the framework for a comprehensive policy approach, strong science review of the bill’s emissions targets, and adequate funding for reducing tropical deforestation, and we presented the Blueprint findings to Congress in April. We will continue to work with legislators to pass the strongest bill possible.
Strong, comprehensive climate legislation faces significant barriers in the form of entrenched special interests. Champions of the status quo including the National Association of Manufacturers and U.S. Chamber of Commerce, as well as the coal and oil industries, are attempting to weaken the bill. However, the Blueprint provides solid evidence for legislators, business leaders, and advocates that smart climate, energy, and transportation solutions are the right choice for our climate and our economy.
Addressing global warming will require a concerted effort to show policy makers and civic and business leaders that our climate and economy are intricately connected—that the path toward a clean energy future will not only help ensure a healthy climate for future generations but also encourage long-term economic prosperity. Implementing the approaches outlined in the Blueprint is an important step down this path, but it is only a first step. Smart climate policies must be extended beyond 2030 to ensure our long-term emissions reduction goals are met. And as recent climate observations have shown, we cannot afford to wait.
Eric Misbach is the administrative coordinator for the UCS Climate Program.
