Carbon reduction: Principle and politics

There's a lot of excitement about ethanol lately, and the President will undoubtedly tell us more about ethanol tonight. But stopping the increase in atmospheric greenhouse gases will take more than just changing how we fuel our cars.

A paper published in 2004 by Pacala and Socolow lays out a range of options for carbon reduction. The options span several major categories: promoting energy efficiency and conservation, shifting from coal to natural gas for electricity production, technological capture and storage of carbon dioxide, expanding energy production from nuclear fission, switching to renewable electricity and fuels, and sequestration in forests and agricultural soils.

While a focus on renewable energy sources is important, it's worth remembering that even ethanol boosters are only talking about replacing a third of the gasoline currently burned within 30 years. And many people consider that overly optimistic. Pacala and Socolow argue that pulling seven major policies from the options above, each reducing carbon emissions by 1 gigaton/year, roughly 15% of current emissions.

Several of those wedges can come from renewable energy, but not all seven. Ending tropical clearcutting and planting new tropical forests could produce one of the wedges, for instance. A 1996 IPCC study found that one wedge worth of reductions could come from implementing more efficient practices in commercial and residential buildings globally. Doubling fuel efficiency of cars would generate one wedge.

Some of those techniques could come from government mandates, especially fuel economy standards. Others would be difficult to enforce directly. It's hard to imagine compulsory wind turbine construction, or a requirement to make buildings more efficient.

Policies do exist which would encourage people and businesses to move towards these solutions on their own, and I'll lay those options out below the fold.

One big policy that gets tossed around a lot is a carbon cap and trade system. Kyoto was based on such a system, Europe has instituted carbon trading between EU members and California is moving towards one also. Of the many climate bills circulating in Congress, several propose some version of such a system. The basic principle of such a program is that you establish fixed limits on carbon emissions, and allocate a share of those emissions to particular companies or facilities. Right now, the European system covers industrial facilities, it will expand in various ways over time. An individual user who implements reforms allowing less emissions can sell the excess to a company that is in danger of exceeding its limits. By gradually lowering the total allocation, you make those tradeable credits more valuable, making conservation more and more cost-effective.

Kevin Vranes, our already missed Scienceblogging buddy, has a nice discussion of a US government report on one proposed cap-and-trade plan being debated in the Senate. In that analysis, the Energy Information Agency found that the rate of growth in energy emissions might decrease, but actual emissions would not over the time scales examined. Cutting the growth rate in half is nice, but it isn't enough. It appears that this plan is limited by a very long delay before emissions are actually capped, and by a "safety valve," allowing energy suppliers to buy exemptions from the caps. The plan also limits carbon "upstream," with the petroleum or coal seller, for instance, rather than at the point of emission. That may reduce incentives for power plants to sequester carbon at the time of combustion, and its effect on urging power generators or car drivers to switch to more efficient fuels will be comparable to a carbon tax, rather than giving them a clear incentive to keep track of their own carbon emissions. It's hard to say whether other plans before Congress, plans that would limit carbon emissions at the source rather than upstream, for instance, would be more effective.

The basic concept of a cap-and trade system is sound. We discussed an application of the principle in discussing fishing quotas a while back, and a coalition of industry and environmental groups have endorsed the concept as well. There are even hints that the President will roll out a version of cap-and-trade, though the White House Press Secretary denies it.

The advantage of that system is that it doesn't require the government to pick a winner, instead encouraging industry could seek and find the best solutions available now, upgrading and intensifying their changes over time. The proposal the EIA analyzed would have allocated revenue from selling quotas into a trust fund that would be spent on addition research on new energy technology. While they couldn't estimate the effects of that reinvestment on the economy, it's not implausible to think that such research could produce new industries, just as Space Race and Cold War investment in technology and training laid the groundwork for the Internet and the personal computer. The Apollo Alliance has suggested that a major push for energy independence within ten years would generate jobs and grow the economy.

A major focus of any such program would be on electrical industry. Since the grid itself is agnostic to the energy source, individual landowners could, in principle, build solar generators or wind turbines and sell energy back onto the grid. Since individual landowners are unlikely to generate enough energy to consistently supply all their own power needs (the wind does stop blowing, and the sun does set), they would still have to buy power from the utilities. Different states have different rules for how this could work. Alternative energy advocates generally favor something called "net metering," in which producers would roll back their electric meter with the power they generate, getting a check from the utility if they produce more power than they consume.

Kansas, a state with huge potential for wind energy, is one of 15 states that does not currently permit net metering. That means that wind development in Kansas is all undertaken by utilities. What could be a new revenue stream to rural economies is taken out of play by that policy decision. While Kansas could be an energy exporter, we instead are lagging behind other states in wind generation.

While energy generation tends to be the focus of our discussions about climate change and energy policy, there's a lot that could be done to reduce energy demand. Compact fluorescent bulbs are getting cheaper and work well in most places where we currently use incandescents. Switching to CFLs would save lots of money and reduce greenhouse gas emissions. Adding insulation, upgrading outdated appliances, putting our computers to sleep when they aren't in use, all of these could cut energy demand. Putting together pre-packaged energy efficiency upgrades could create new exports to the developing world, and would help them leapfrog over the part of our industrial growth that set the stage for the problem we now face.

The government might have a hard time forcing compliance with these matters, but can take some steps. Raising vehicle fuel economy is one important step, one in which we are fallling behind other industrial nations, as An Inconvenient Truth pointed out. This reduces the competitive advantage of American auto manufacturers at home and abroad. Raising fuel economy standards would serve to protect American jobs, by ensuring that all manufacturers have to bear the same cost in terms of research, development and manufacturing. Creating tax incentives for energy efficient products, grants or low-interest loans for companies to upgrade their production practices and energy efficiency would be another powerful tool. Walmart has already declared that, in order to save money, they will require their suppliers to upgrade their energy efficiency, and will loan companies the money to make changes if necessary.

Tonight, when the President talks about our "addiction to foreign oil," and the necessity of changing our energy policies, listen for these other parts of the equation. If, as in previous years, he just tells us more about ethanol and hydrogen fuel cells, he's only playing politics. That isn't and cannot be the whole story.

Coming up next: trade policy and carbon reduction. But first a diversion into Congressional minutiae.