A Focus on USA Energy Policy – On Target?

It was a curious time in Washington DC last week. While the House Energy and Natural Resources Committee voted against three amendments on the validity of climate change science and its potential future impact, some 400 other people were meeting close to the Capitol at the IETA (International Emissions Trading Association) Carbon Forum North America. The Forum attracted a wide range of participants from House and Senate staff, state government policy makers, senior industry representatives of Fortune 100 companies and lead representatives of US policy think tanks and NGOs. All focused on a single key issue, the need for a clear way forward with regards CO2 legislation in the United States.

While legislative clarity is needed but remains in limbo, the nation has nevertheless pledged, and the Administration continues to reiterate, its goal to reduce emissions by 17% by 2020 relative to 2005. This was the subject of one of my early posts in April 2009 and at that time it looked to be a formidable undertaking even with a clear policy framework in place. Yet as I noted just a few months ago, much has changed as a result of the global financial crisis and the expanding role of natural gas in the economy.

Recent (late February) greenhouse gas data released by the EPA for the calendar year 2009 shows the impact of the recession, but also offers some further insight into the pathway forward. Economy wide emissions have dropped sharply, with the carbon intensity of the power generation sector dropping even faster.

In addition, revised EPA regulations are expected to have a significant impact on coal fired power generation. A study released by The Brattle Group last December assessed the impact of emerging EPA regulations on air quality, water use and ash disposal and the choice of retrofit or retirement for older coal fired units. The key conclusion of the study is that up to 66 GW of coal capacity could close by 2020. Natural gas is a potential and probably likely replacement. Although new nuclear is now in planning, any further acceleration could well be delayed by the events in Fukushima over recent days. Renewables will play a role, but I have assumed that they fill the demand gap for electricity versus current levels – i.e. they do not contribute to an actual reduction in emissions.

In addition to the power sector, the auto sector is also changing. Biofuels are continuing to come into the mix, revised CAFE standards are having an impact and by 2020 some (small) part of the fleet will be electric. Higher oil prices will almost certainly have some impact on vehicle use. Assuming an on-the-road efficiency of 22 mpg today and incoming vehicles improving from 27 mpg now to 35 mpg in 2020, a theoretical drop in gasoline consumption of just over 10% is possible, even with a rise in the total number of vehicles as population increases.

Pulling all this together and assuming some rise in industrial CO2 as the economy recovers, but no rise in other sectors as efficiency improvements take hold, it is possible to build a case for a reduction in CO2 emissions of up to 14% by 2020 vs. 2005.

But to get to 17% with some certainty, two additional changes are necessary. A further 35 GW of coal fired generation needs to be replaced by natural gas and the carbon footprint of the biofuels coming into the gasoline pool needs to improve beyond the madates for advaced biofuels. Both of these need a carbon price.

While it was clear in Washington last week that a sharp political divide remains in terms of progress on this issue, it was also clear from the IETA meeting that those actually making the decisions on new generating capacity are assuming a carbon price anyway. This assumption alone may well see the additional 35 GW go and allow the US to at least come close to meeting its international obligation.

A Focus on USA Energy Policy – On Target? | The Energy Collective

NPR: Nuclear as Usual

WattHead.org Founder and Chief Editor and Breakthrough Institute Director of Climate and Energy Policy Jesse Jenkins was on NPR's Weekend Edition this past Sunday discussing Japan's nuclear crisis and what it means for the future of nuclear power. The interview touched on many of the issues that were the subject of a recent Atlantic Monthly article co-authored by Jenkins and Breakthrough Institute co-founders Ted Nordhaus and Michael Shellenberger. Here is an excerpt of that article:

[L]ost in the hyperbolic claims of nuclear opponents, the defensive reactions of the nuclear industry, and the carefully calibrated repositioning of politicians and policymakers is the reality that Fukushima is unlikely to much change the basic political economy of nuclear power. Wealthy, developed economies, with relatively flat energy growth and mature energy infrastructure haven't built a lot of nuclear in decades and were unlikely to build much more anytime soon, even before the Fukushima accident. The nuclear renaissance, such as it is, has been occurring in the developing world, where fast growing, modernizing economies need as much new energy generation as possible and where China and India alone have constructed dozens of new plants, with many more on the drawing board.

Absent Fukushima, developed world economies were not going to build much new nuclear power anytime soon. The deliberations in Germany have involved whether to retire old plants or extend their lifetimes, not whether to build new plants. The decade long effort to restart the U.S. nuclear industry may result in the construction of, at most, two new plants over the next decade. By contrast, even a much more serious accident would have been unlikely to delay the construction of new nuclear plants in the developing world for long. For major emerging economies like China and India, energy is still too scarce and expensive for much of their populations and economies and they will likely continue to build new nuclear plants as fast as they can in the coming decades. In the end, what it all looks like is business as usual, for nukes specifically and the global energy economy more generally. Despite the claims of proponents, present day renewables remain too expensive and undependable for any economy in the world to rely upon at significant scale. So Germany, despite its vaunted solar feed in tariffs, will rely more heavily upon coal, which it has in abundance, as it retires its aging nuclear fleet. The US, already in the midst of a natural gas boom, will use more gas. And China and India, desperate for every kilowatt of power they can produce, will develop every available energy resource they have as fast as they can, including nuclear.

Jenkins also appeared on MSNBC's The Dylan Ratigan Show at 1:40 PM PST/ 4:40 PM EST today to discuss nuclear power and the situation in Japan. Check out the clip here.

About Jesse Jenkins

Jesse is currently the Director of Energy and Climate Policy at the Breakthrough Institute where he helps develop and advance new energy solutions to power America's future, secure our energy freedom, and halt global warming. Jesse joined the Breakthrough team in June 2008 to co-direct the Breakthrough Generation Summer Fellows Program, and previously worked as a Policy and Research Associate at the Renewable Northwest Project. He is the founder and editor at www.WattHead.org - Energy News and Commentary and writes regularly at theBreakthrough.org, and his work has appeared on The Huffington Post, Grist.org, Forbes.com, and in the San Francisco Chronicle and Baltimore Sun. A full bio can be found here: http://www.thebreakthrough.org/staff.shtml#jesse

WattHead's Jesse Jenkins on NPR: Nuclear as Usual | The Energy Collective