Issue Immersion Session: U.S. Climate Policy

1
Issue Immersion Session U.S. Climate Policy

• WRIs 2008 MindShare Meeting
• September 17, 2008

2
What has happened in Congress thus far and what
can we expect in the future

• 2008 Dry run in Congress Senate bill
  (Lieberman-Warner) did not pass but momentum was
  gained process was constructive in educating
  policy makers on the issue and highlighting
  concerns
• Numerous bills introduced in House of
  Representatives legislative hearings taking
  place wont vote on a bill this Congress
• With a new president supportive of cap and trade,
  landscape will change next year, will increase
  Congress likelihood of enacting legislation
• Timing legislative activity in 2009 pass law
  in 2010.

3
What are concerns most likely to slow down
passage of legislation

• Cost to consumer job losses gas prices
• Is the technology available to meet the emission
  reduction targets called for by the science?
• Concerns about developing country actions,
  competitiveness and job loss
• Bill creates massive bureaucracy, redistribution
  of wealth, fighting over how revenue should be
  used

4
How does US policy fit into international need
for action

• Global problem requires commitments from
  developed and developing countries
• Need strong US domestic policy to bring to
  international negotiation process
• Treaty requires 67 or 60 Senate votes a heavy
  lift

5
WRI is working on many critical issues

• Four examples
• GHG reductions cost too much
• Technology is not available
• U.S. competitiveness will be compromised
• Targets and timetables are unattainable

6
Identifying policy options to reduce the cost of
climate policy
WRIs work on cost containment

• Primary focus on cap and trade
• Cost of compliance as well as cost to consumers
• Options include
• Domestic, international offsets
• Banking and borrowing
• Allowance reserve
• Related policies (e.g. allowance allocation) also
  important

7
Evaluating mechanisms in federal bills
WRIs work on cost containment

• Boxer-Lieberman-Warner bill targets and U.S.
  emissions
• if 15 offsets used

8
Leveling mechanisms
WRIs work on international competitiveness
Coordinated international action
Cost containment mechanisms
Trade measures
U.S. market price
Market price
CO2 costs
Global market price
Market price
Market price
Price of carbon intensive good
Non-CO2 Costs
Inside U.S.
Outside U.S.
Inside U.S.
Outside U.S.
Inside U.S.
Outside U.S.
InsideU.S.
Outside U.S.
Adapted from Cutting Carbon in Europe, April
31, 2008 presentation by Michael Grubb and Thomas
Counsell
9
WRIs work on international competitiveness
10
WRIs work on GHG abatement technology
Identifying what it takes to generate a Wedge
Humanity already possesses the fundamental
scientific, technical, and industrial know-how to
solve the carbon and climate problem for the next
half-century. - S. Pacala and R. Socolow,
Science, 13 Aug 2004, Vol. 305
11
Identifying the hurdles to deployment at scale
WRIs work on GHG abatement technology

• Technical challenges
• Policy challenges
• Financing challenges
• Example
• CCS Diverse stakeholder dialog to produce
  consensus guidelines on CO2 storage and liability

12
Targets vary in stringency
WRIs work on meeting targets
13
WRIs work on meeting targets
Example Boxer-Lieberman-Warner bill would have
been a significant departure from business as
usual
BAU
Total abatement required to meet national target
B-L-W
Million metric tons CO2e
14
EPRI analysis finds that covered sector abatement
is possible
EIA Base Case 2007
EIA Base Case 2008
Technology EIA 2008 Reference Target
Efficiency Load Growth 1.2/yr Load Growth 0.75/yr
Renewables 60 GWe by 2030 100 GWe by 2030
Nuclear Generation 20 GWe by 2030 64 GWe by 2030
Advanced Coal Generation No Existing Plant Upgrades 40 New Plant Efficiency by 20202030 130 GWe Plant Upgrades 46 New Plant Efficiency by 2020 49 in 2030
CCS None Widely Deployed After 2020
PHEV None 10 of New Vehicle Sales by 2017 2/yr Thereafter
DER lt 0.1 of Base Load in 2030 5 of Base Load in 2030
15
Abatement from EPRI analysis wont get us all the
way there.
BAU
Abatement potential from power sector as
presented in EPRI full portfolio scenario
B-L-W
Million metric tons CO2e
16
What do we need to get the rest of the way there?
BAU
Remaining abatement needed to meet target
Million metric tons CO2e
B-L-W
17
What does your company need to achieve the
abatement necessary to meet strong targets?

• Technology
• Policy
• Management