Selected category: Economics

Carbon Pollution Standards that Begin by 2020: Vital for Climate Security, Human Health

The U.S. Environmental Protection Agency (EPA) is hard at work right now on the Clean Power Plan – the first ever national carbon pollution standards for power plants.

Among the many important aspects of this historic plan, we believe this: It is critical that EPA finalize carbon pollution standards for the power sector that include protective, well-designed standards beginning in 2020. 

Power plants account for almost 40 percent of U.S. carbon dioxide emissions, making them the largest source of greenhouse gas emissions in the nation and one of the largest sources of greenhouse gases in the world.

The Clean Power Plan will be finalized this summer. When fully implemented, it is expected to reduce greenhouse gas emissions from the power sector to 30 percent below 2005 levels. That makes these eminently achievable and cost-effective standards integral to climate security, human health and prosperity.

The Clean Power Plan will phase in over a 15-year period, with interim standards commencing in 2020, and final standards taking effect in 2030 – and there is strong reason to believe that the interim standards covering the period 2020 to 2029 should be strengthened in the final rule.

Interim standards can help the U.S. secure near-term low-cost opportunities to reduce greenhouse gas emissions, while generating the market signals necessary to achieve the deeper reductions required in the years ahead. They also can deliver important public health benefits for our families by providing healthier and longer lives for millions of Americans. And EPA has designed the interim standards in a manner that provides considerable flexibility to states and power companies to comply while deploying their own unique solutions.

Carbon Pollution Limits that Begin by 2020 are Essential for Driving Near-term Actions to Reduce Dangerous Emissions and to Advance Climate Security

As proposed, the Clean Power Plan’s interim standards could deliver cumulative emissions reductions of more than 5 billion tons of carbon dioxide. That approaches the total annual carbon dioxide emissions for the entire United States. Protective interim standards that require states and power companies to take near-term action to reduce carbon pollution are essential to secure these climate benefits.

Interim standards are essential for mobilizing the full range of near-term cost-effective opportunities to cut pollution, as they are the only way to ensure that investments in activities that reduce carbon pollution are fully recognized and properly rewarded. This is true whether the investments are new renewable generation, customer-friendly demand side energy efficiency programs, or other low-carbon solutions.

As the cost of clean energy decreases and the heavy burden of carbon pollution increases, a near-term limit on carbon emissions helps ensure these vital solutions are deployed without delay.

Interim standards can also help drive sustained investments in one especially important area – energy efficiency. Investments in energy efficiency can lead to direct financial benefits for customers – families and businesses alike – in the form of lower electric bills.

23 states are already implementing mandatory efficiency savings targets. These efforts have been overwhelmingly successful, regularly delivering two dollars of savings to customers for every one dollar invested – and in some cases up to five dollars for every one dollar invested.

Even in those states that have been implementing these programs for a while, there is little reason to believe that they have come anywhere close to exhausting the available potential. For example, analysis by McKinsey & Company found that implementing only those efficiency measures that pay for themselves would reduce the country’s total end-use energy consumption by 23 percent by 2020 relative to a business-as-usual scenario.

Analysis by the National Academy of Sciences found that the building sector could reduce energy consumption by 25 to 30 percent between 2030 and 2035, at a cost of just 2.7 cents per kilowatt hour saved. In addition, they found that cost-effective measures could reduce industrial demand 14 to 22 percent by 2020.

For all these reasons, electricity bills are actually expected to decrease as a result of efficiency investments power companies and states make to comply with the Clean Power Plan.

Near-Term Reductions are Essential to Ensure Healthier, Longer Lives for Millions of Americans

The interim emission standards are expected to drive significant near-term public health benefits across America.

In 2020 the proposed standards are expected to prevent:

  • Up to 4,300 premature deaths
  • Up to 100,000 asthma attacks in children
  • Up to 2,100 heart attacks
  • Up to 1,500 hospital admissions
  • Up to 290,000 missed school and work days

Even greater benefits are anticipated in later years.

That’s because power plants are major sources of emissions for a range of pollutants that contribute to ground-level ozone, better known as smog, and dangerous particulate pollution, better known as soot. Power plants are also a major source of emissions for pollutants that have neurotoxic or carcinogenic (cancer-causing) effects.

Power plants account for about 70 percent of U.S. total sulfur dioxide emissions and 46 percent of mercury emissions, and are important sources of nitrogen oxides. Steps taken to reduce carbon pollution under the Clean Power Plan will have the co-benefit of reducing emissions of these and other harmful air pollutants.

EPA estimates that these human health benefits outweigh the costs of compliance by a factor of seven to one.

Each year they are in effect, these important safeguards provide healthier and longer lives for Americans.

Protective Interim Standards are Flexible and Achievable

The goals of the Clean Power Plan are eminently achievable, as they are based on proven and cost-effective methods for reducing carbon pollution that many states and power companies are already demonstrating.

In addition, the Clean Power Plan provides an extraordinarily flexible structure in which states are able to craft their own path forward for reducing carbon pollution, so long as they meet the 10-year average interim target over the period 2020-2029 and then achieve the final reduction target in 2030. This flexibility provides states with the opportunity to harness their own unique opportunities and solutions in light of their own policy preferences.

When evaluating the feasibility of the standards, it is important to consider how quickly the nation’s grid is already decarbonizing. Emissions of carbon pollution from the power sector fell 15 percent from 2005 to 2014. As proposed, the Clean Power Plan only requires them to fall another 15 percent by 2030. Analysis by EIA suggests that the U.S. could cost-effectively reduce greenhouse gas emissions from the power sector about four times faster.

Here’s more evidence that the grid is decarbonizing at a considerably faster rate than what is required by EPA – in the five year period from 2007 to 2012, the Northeastern states reduced their carbon dioxide emissions from large power plants by 37 percent to 42 percent below 2005 levels. The reductions were due to a wide range of factors, including the adoption of the Regional Greenhouse Gas Initiative, shifting natural gas prices, and efficiency investments. That demonstrates the dynamic flexibility and adaptability of which the grid is capable.

This is all happening in the context of a continuously evolving and decarbonizing electric system. Since 2000, the U.S. has installed roughly 30 gigawatts of new generation capacity per year, the vast majority of which was natural gas and renewables. According to EIA, more than 20 gigawatts of utility scale renewables, natural gas, and nuclear generation are already scheduled to come online in 2015, almost half of which is wind.

Meanwhile, we continue to build new infrastructure – which can help unlock even greater opportunities.

For example, according to the Department of Energy, during the last several years more than 2,300 circuit miles of new transmission additions were constructed annually. According to FERC, there are almost 10,000 miles of proposed new transmission projects in various stages of development that have a “high probability of completion” by January 2017.

Protective interim standards will align our nation’s major investments in new infrastructure with climate security – providing lasting protections and smart investments.

Interim Standards Can Help Promote Investments that Drive Even Deeper Reductions in the Years Ahead 

The cost of zero carbon generation is rapidly falling. Wind and solar are cheaper than coal – and even natural gas in a growing number of markets.

Renewable prices are expected to continue their meteoric decline. The price for photovoltaic modules has fallen 80 percent since 2007, and wind prices have fallen 64 percent since 2009.

As a result, the solar industry is expecting to build another 20 gigawatts of new generation over the next two years alone. That’s roughly equivalent to the generation of 13 mid-sized coal plants. (The average capacity factor for new utility scale solar array is around 20 percent, while the average monthly capacity factor for the coal fleet was 61 percent in 2014.)

While EPA’s building blocks assume only modest growth in renewable generation over the next 15 years, recent shifts in price dynamics suggest that the actual market opportunity could be considerable. For this opportunity to materialize, however, power companies and investors need a clear signal about the value of reducing carbon pollution from the power sector.

Providing the clear investment signal beginning in 2020 can shape the broader range of infrastructure investments expected in the coming years, and ensure that they are consistent with the low carbon future we will need if we are to stave off the worst impacts of climate change.

That broader range of infrastructure investments includes the vast miles of electric transmission and natural gas pipelines that are expected to be built in the coming years, as well as investment decisions in today’s generation fleet. More than 30 percent of coal plants are 50 years old, and approximately one in four plants do not contain controls for sulfur dioxide or nitrogen oxides.

In total, utilities appear poised to invest up to $2 trillion in new generation, transmission, and distribution infrastructure between 2010 and 2030 in order to modernize aging generating facilities and grid systems. Any delay in establishing carbon pollution standards for the power sector increases the uncertainty and increases the risk that investments could become stranded in the future.

All of this suggests that well-designed interim standards are both achievable and essential. If anything, the standards should be strengthened given the urgency of the climate challenge, the scale of change we have seen in the power sector to date, and the significant public health and economic benefits the standards can provide.

We have an opportunity as a nation to take advantage of the fact that the economics of power generation are rapidly changing. The best way for both companies and states to position themselves for a competitive advantage in the future is to think long-term and to get on the leading edge of these emerging trends. Otherwise, there is a risk of reinvesting in assets that will be left behind by a changing market, leaving shareholders and ratepayers on the hook.

The Clean Power Plan presents a real opportunity. Let’s all work together to strengthen the program, and work to deliver a vibrant low-carbon economy for the United States.

Also posted in Clean Power Plan, Energy, Greenhouse Gas Emissions, Health| Read 1 Response

Court Hears Arguments on Fuel Efficiency and Greenhouse Gas Standards for Big Freight Trucks

The U.S. Court of Appeals in Washington D.C. heard oral arguments today in challenges seeking to overturn historic, first-generation standards to improve fuel efficiency and reduce greenhouse gas emissions from large trucks and buses.

The standards were finalized by the U.S. Environmental Protection Agency (EPA) and the National Highway Traffic Safety Administration (NHTSA) in 2011.

The standards apply to vehicles manufactured between 2014 and 2018. They are based on commonsense, highly cost-effective technologies that will make our nation’s fleet of large trucks and buses more efficient — reducing harmful climate-destabilizing pollution, limiting our dependence on foreign oil, and saving money for both truckers (in the form of lower fuel costs) and consumers (in the form of lower shipping costs).

EPA estimates that, over the lifetime of vehicles sold between 2014 and 2018, the standards will:

  • Reduce climate pollution by more than 270 million metric tons of carbon dioxide equivalent
  • Reduce oil consumption by more than 530 million barrels
  • Result in net savings of up to $73,000 in avoided fuel costs over the lifetime of a new long-haul truck.

These cross-cutting benefits engendered broad-based support for the standards, including support from our nation’s truck and engine manufacturers, from states, and from public health and environmental groups.

In response to the President’s announcement of these first generation standards in 2010, many of these organizations sent letters of support. Here are just a few examples:

Cummins Inc. recognizes the benefits for the country of a National Program to address greenhouse gases (OHOs) and fuel efficiency from medium and heavy-duty trucks and buses. Cummins fully supports the adoption of such a National Program and welcomes this opportunity to be a partner in helping to advance that goal.

[Daimler] is committed to working with EPA and NHTSA, the states, and other interested parties to help address three of the most pressing issues facing the U.S. today and into the future: greenhouse gas reductions, fuel efficiency improvements, and increased energy security.

As 2015 begins, these clean air measures are now in their second year of effectiveness, and they are driving technological innovations that are cleaning the air and helping American truck manufacturers to thrive.

Through October of 2014, sales of fuel efficient trucks were 20 percent higher than their 2013 levels. 2015 is projected to be even stronger, with forecasts suggesting it will be the third strongest year ever for truck sales.

Martin Daum, president and CEO of Daimler Trucks North America, put it succinctly:

[T]hese standards “are very good examples of regulations that work well.”

None of these truck and engine manufacturers were in court today challenging the first generation truck standards, which are based on rigorous technical information and firmly grounded in the law. The standards are a testament to the fact that collaboration among truck manufacturers, states, and other interested parties can reduce pollution, enhance our nation’s energy security, and save truckers and consumers money.

That is very good news, because President Obama recently announced that EPA and NHTSA will issue second-generation greenhouse gas and fuel efficiency standards for large trucks.

Many of the same companies that stood with the President in announcing a blueprint to develop the second phase standards also collaborated on the first generation clean trucks standards. Among those supporting the President’s announcement of second phase standards included the nation’s major manufacturers and fleets such as Conway, Cummins, Eaton, Wabash National, Waste Management and the American Trucking Association.

When our nation stands together, we can forge big gains in strengthening our economy and protecting our environment.

Also posted in Cars and Pollution, Greenhouse Gas Emissions, News, Partners for Change| Comments are closed

Carbon markets reward 10 pioneering states. Who's next?

Source: Flickr/Nick Humphries

A handful of states are already proving that economic growth and environmental protection can go hand in hand – and they’re using market forces, price signals and economic incentives to meet their goals.

These results are particularly salient as states consider how to comply with the U.S. Environmental Protection Agency’s plan to limit dangerous pollution from power plants.

So let's take a closer look at what's happening on our two coasts.


California: 4% cut in emissions, 2% growth

California’s landmark cap-and-trade program is closing out its second year with some strong results. Between 2012 and 2013, greenhouse gas emissions from the 350+ facilities covered by the program dropped by 4 percent, putting California solidly on track to meet its goal to cut emissions to 1990 levels by 2020.

During the same period, the state’s gross domestic product jumped 2 percent.

What’s more, the climate change and clean energy policies ushered in by California’s Global Warming Solutions Act of 2006 helped slash carbon pollution from in-state and imported electricity by 16 percent between 2005 and 2012.

All this while attracting more clean-tech venture capital to California than to all other states combined.

Northeast: GDP rises as emissions and power prices drop

Those who would rather turn east for inspiration can look to the nine-state Regional Greenhouse Gas Initiative, a cap-and-trade system stretching from Maryland to Maine.

Since the RGGI program launched in 2009, participating states have cut their greenhouse gas emissions 2.7 times more than non-RGGI states, while growing their gross domestic product 2.5 times more than non-RGGI states.

The states have experienced these dramatic win-win benefitswhile also seeing retail electricity prices across the region decline by an average of 8 percent.

With 70 percent of Americans supporting EPA’s Clean Power Plan – and given that everyone warms up to the notion of a sound economy – can these carbon markets be replicated elsewhere?

States choose their own path

EPA’s rules aim to cut power plant pollution by 30 percent by 2030, giving states individual reduction targets along withgreat flexibility to meet that national goal.

Hitting the sweet spot of supporting economic growth and environmental protection will be a primary objective, and the options are virtually endless. Energy efficiency, renewable energy, power plant efficiency and cap-and-trade are all good bets.

Expanded markets offer new options

Not surprisingly, EPA mentioned RGGI numerous times in its proposed power plant standards as an efficient way to cut carbon pollution. Since then, experts have suggested that regional markets, or even a single national market in which all 50 states participate, may be a way to make the plan affordable.

States still have some time to ponder their options.

EPA is expected to finalize the rule in summer 2015, and states have another year after that to submit plans to EPA detailing how they intend to meet their targets. Those entering into multistate agreements have three years.

The good news is that they wouldn’t be starting from scratch. The experiences of California and the RGGI states can provide useful, real-world insights as states plot their path toward a clean energy future.

This post originally appeared on our EDF Voices blog

Also posted in Clean Air Act, Clean Power Plan, Energy, Greenhouse Gas Emissions, Policy| Comments are closed

Why these leading companies welcome EPA's carbon pollution rules

Copyright: istockphoto.com

Who’s for carbon emission rules? For starters, some of America's largest companies and most innovative industry leaders, who are moving aggressively to wean themselves off fossil fuel-fired power through energy efficiency and conservation.

So far, more than 120 corporations have come out in favor of the U.S. Environmental Protection Agency’s plan to cut carbon emissions from power plants, including some of our most well-known brands.

It’s not hard to understand why.

Regulatory certainty and a growing market for increasingly competitive renewable energy will help these companies manage risk, meet changing customer expectations and achieve corporate sustainability goals.

Added bonus: They earn recognition for being on the cutting edge of the clean energy economy.

"Just what we need"

The California headquarters of The North Face is 100 percent powered by solar and wind, and it feeds excess electricity into the grid. Other buildings owned by the outdoor products company have similar ambitions.

"EPA’s plan will help spur additional investment in renewable energy and energy efficiency and that’s just what we need,” says James Rogers, North Face’s sustainability manager.

JLL, a commercial real estate giant that has made energy-efficiency a key part of its portfolio, agrees. Since 2007, the company has helped clients reduce greenhouse gas emissions by nearly 12 million metric tons and energy costs by $2.5 billion.

“I’d like to think that more efficiently managing our electricity and power facilities is truly a ‘no brainer,’” writes JLL’s chairman of energy and sustainability services, Dan Probst, who has also spoken publicly in favor of EPA’s plan. “It will reduce greenhouse gas emissions and our impact on the planet, reduce costs for both power companies and consumers, and help drive the economy.”

And in September, IKEA’s chief executive and group president, Peter Agnefjäll, and Steve Howard, the home furnishing company's chief sustainability officer, marched with 400,000 others in the People’s Climate March in New York City to call for stronger policies on global warming.

“We need strong policy leadership in order for us and others to accelerate innovation,” Agnefjäll noted.

Climate change bad for business

But business leaders at the forefront of the clean energy movement are also driven by concern that unabated climate change will hurt the long-term viability of their businesses.

For example, Starbucks’ sustainability manager Jim Hanna has been warning for several years that soil changes and increased threats from pest infestations are altering the way coffee can be grown. Global warming already poses "a direct business threat to our company," he has said.

And today, the private sector is becoming increasingly concerned that water scarcity may hamper business growth in coming years.

Resources for businesses

Here at Environmental Defense Fund, we believe that the Clean Power Plan is an opportunity for any business that wants to get ahead of the game.

Building on our long track record of partnerships with the private sector, we’ll be working with businesses to help them make their voices heard as the Clean Power Plan takes shape – and to prepare them for a new reality.

Interested in learning more? We're hosting a webinar on November 19 to get the conversation started and look forward to the collaboration.

This post originally appeared on our EDF Voices blog

Also posted in Clean Air Act, Clean Power Plan, Energy, Green Jobs, Jobs| Comments are closed

History 101: Pollution rules good for economy and pocketbooks

Source: Flickr/Ervins Strauhmanis

This blog originally appeared on EDF Voices

So our political landscape is morphing yet again, and the future looks uncertain. But there are some things we know will happen over and over, like rituals.

We know that next time it snows, someone will make a tired joke about how global warming must be over. And next time the U.S. Environmental Protection Agency unveils another plan to reduce air pollution and protect public health, opponents will claim it’ll cost a fortune and ruin our economy.

I'm sure they're now trying to sell a recent study claiming that EPA’s plan to cut carbon dioxide emissions from power plants will hit consumers, when the best available data points to the complete opposite.

History shows that opponents of environmental regulations consistently miss the mark on costs.

Economic benefits of clean air offsets costs, by far

The benefits of the Clean Air Act and its amendments, which have been around since 1970 and 1990, have outweighed costs 30 to 1.

In fact, EPA estimates that in 2020, the Clean Air Act amendments will prevent 230,000 early deaths. The monetized benefits are expected to approach $2 trillion by 2020.

And still, when the amendments were first enacted, opponents claimed they would be financially ruinous. They said the same thing about efforts to limit acid rain pollution.

When in reality, we achieved the Acid Rain Program reductions in less time, and for less money, than anyone expected.

As states implement the Clean Power Plan, look for environmental regulations to prove themselves cost-effective once again. Early benefit-cost analyses of the plan show net benefits (benefits minus costs) of almost $70 billion annually by 2030.

Smart energy choices pay off

There’s also plenty of evidence that EPA is not the reason for the coal industry’s decline, or for the economic struggle in coal-producing states. The real story is that coal is losing to cheaper natural gas in the marketplace.

Clean energy sources and energy conservation are also emerging forces in what used to be coal’s monopoly market – and they’re providing benefits for both our wallets and our lungs. Between 2008 and 2013, savings from utilities' energy efficiency programs rose 116 percent, and power from renewables more than doubled.

But the best argument against the “sky-is-falling” frenzy is to look at the alternative.

Right now, the United States has no national limits on carbon pollution from power plants.

Climate change is expensive

Carbon pollution is the main underlying cause of climate change, and power plants are America’s single biggest source of carbon pollution. Climate change is already costing us, and will cost a lot more in the future.

The latest IPCC report lists some of the many ways that climate change puts humanity at risk – through heat stress, storms and extreme precipitation, inland and coastal flooding, landslides, air pollution, drought, water scarcity, sea-level rise, storm surges and threatened food supplies.

The National Climate Assessment says “climate change threatens human health and well-being.” The Pentagon, meanwhile, calls climate change a “threat multiplier” that will affect national security.

Continuing to allow unlimited carbon pollution is the expensive and irresponsible option.

Time to act

The Clean Power Plan will set the first-ever national limits on carbon pollution from power plants. It will protect public health and the environment, and help us avoid the worst damage from climate change – and it will do so without costing anywhere near what opponents are claiming it will.

In fact, EPA estimates that by 2030, when the Clean Power Plan is fully implemented, electricity bills will be about 8 percent lower than they would have been otherwise. That would save Americans about $8 on an average monthly residential electricity bill.

So we can afford the Clean Power Plan. In fact, we can’t afford a future without it.

Also posted in Clean Air Act, Clean Power Plan, Greenhouse Gas Emissions, Policy| Comments are closed

The Clean Power Plan and the Deployment of Renewable Energy

(This post originally appeared on Resources for the Future's Expert Forum on EPA's Clean Power Plan, on October 2, 2014)

The proposed Clean Power Plan identifies the “best system of emission reduction” to address carbon pollution from power plants as comprised of four building blocks: (1) efficiency improvements at coal-fired power plants; (2) shifts in utilization away from higher-emitting fossil plants towards lower-emitting fossil plants; (3) deployment of zero-carbon generation sources such as wind and solar; and (4) harvesting demand-side energy efficiency improvement opportunities.

This system best satisfies the statutory command of the Clean Air Act, which directs EPA to identify the system that maximizes emissions reductions, considering cost and impacts on energy and other health and environmental outcomes.

This system also reflects what is happening across the country (and indeed, around the world) to reduce carbon pollution—states and companies are using the interconnected electric system as a whole to cut carbon pollution, deploying zero- and low-emitting generation and reducing reliance on high-emitting generation, and doing so flexibly to ensure that reliability is maintained and emissions reductions are achieved cost-effectively.Fifteen states wrote to EPA Administrator Gina McCarthy as the Clean Power Plan was being developed to describe the success they have had in deploying this system, cutting carbon pollution from power plants by 20 percent between 2005 and 2011, with some states achieving reductions of over 40 percent during that period.

Renewable energy is our future.

More than 60,000 megawatts of wind energy capacity have been installed in 39 states and an additional 12,000 megawatts are under construction. Wind power capacity in the United States has increased nine times over since 2005, supporting over 80,000 jobs and driving a new manufacturing sector with over 550 facilities across the country. Solar generating capacity is also rising rapidly—increasing by 418 percent between 2010 and 2014. PG&E has connected more than 100,000 customers with solar panels to the grid, saving the average residential customer with solar panels $130 a month. Costs of renewable generation have been falling rapidly, and power companies such as Xcel, DTE, MidAmerican, Georgia Power, and Austin Energy have announced renewable energy purchases that are outcompeting fossil-fueled alternatives and that will lower customer bills by saving fuel costs.

The Clean Power Plan’s assessment of the potential for renewable energy to reduce carbon pollution bases state targets on an average of existing renewable energy policies in different regions of the country. By taking this approach—effectively looking backward—the proposal fails to reflect the dynamism in renewable energy deployment that is happening across America, and fails to satisfy Section 111’s technology-forcing framework.

The proposed alternative approach, which would consider the technical and economic potential to harvest renewable energy in each state, has the potential to better reflect the country’s vast renewable energy resources. The analysis underlying the alternative approach needs to be updated to reflect current technologies (such as taller wind turbines and distributed generation) and current costs (which are falling rapidly).

An up-to-date analysis of the technical and economic potential for renewable energy to cut carbon pollution will provide a strong legal and technical foundation for the Clean Power Plan, and help facilitate our transition to the clean energy–fueled economy of the future.

Also posted in Clean Power Plan, Energy| Read 1 Response
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