Climate 411

Powerful Testimonies at EPA Hearing on Carbon Pollution Standards for Power Plants

By Mandy Warner / Published: February 10, 2014

If you were busy watching the Winter Olympics, you may have missed another important–if slightly smaller–event that happened last Thursday:

The U.S. Environmental Protection Agency (EPA) held a hearing in Washington, D.C. on the proposed carbon pollution standards for new power plants.

U.S. power plants are one of the largest sources of carbon pollution in the world. Carbon pollution is the main reason for climate change.

EPA’s proposed standards will set the first-ever national limits on carbon pollution from new fossil fuel power plants.

I had the privilege of testifying on behalf of EDF and its 750,000 members.

It was uplifting to hear testimony from so many diverse groups in support of these historic proposed standards.

Among those testifying were:

  • U.S. Senator Sheldon Whitehouse of Rhode Island
  • Moms Clean Air Force, on behalf of hundreds of thousands of moms across America
  • Public health groups
  • Environmental justice groups
  • Veterans and national security groups
  • Groups representing clean energy companies
  • Latino groups
  • Faith groups

and many more …

But climate change is an issue that threatens communities and families across America.

That’s why it was especially touching to hear the personal stories of how climate change impacts people, including one woman from Virginia who testified about raising a daughter with asthma, about the financial impacts of the disease–and about how the costs of pollution are not borne by the emitters, but by the public–and by families like hers.

Carbon pollution is a problem that we can fix.

Consider these facts:

  • Clean energy continues to grow, and it is clear that America can generate affordable, clean electricity.
  • Wind generation increased by more than 40 percent in the United States between 2011 and October of 2013.
  • In April of 2013, the United States had a record month for wind power with generation of more than 17,000 gigawatt hours.
  • In 2012, rooftop solar panels cost approximately one percent of what they did 35 years ago.
  • Since 2008, as the cost of a solar module dropped from $3.80 per watt to 80 cents per watt, solar deployment has jumped by about 10 times.
  • U.S. solar jobs grew 20 percent last year. The industry now supports more than 140,000 jobs.
  • Renewable energy is expected to account for 28 percent of the growth in electricity generation from 2012 to 2040.

At the hearing, some opponents of EPA’s common-sense standards testified, representing groups like the American Petroleum Institute and the American Coal Council.

They repeated claims we have heard time and again about clean air standards costing too much or technology not being available.

We have heard similar claims in the past—claims that were subsequently disproved—about scrubbers and mercury controls.

EPA has found that carbon pollution controls, like carbon capture and storage, are adequately demonstrated for new coal-fired power plants—and that finding is based on an extensive body of technical information.

It is clear from the more than four million people who have weighed in with EPA in support of these standards that many Americans are ready for a clean energy future, and believe it is imperative that we address the largest source of carbon pollution in our country.

You can help the fight to limit the carbon pollution from power plants by urging EPA to adopt strong standards. You can submit comments to EPA through our EDF website.

Also posted in Clean Air Act, News, Policy / Comments are closed

Reality check: Society pays for carbon pollution and that’s no benefit

By Gernot Wagner / Published: February 4, 2014

This open letter, co-authored by Jeremy Proville and first published on EDF Voices, was written in response to a New York Times article citing Dr. Roger Bezdek’s report on “The Social Costs of Carbon? No, The Social Benefits of Carbon.”

Dear Dr. Bezdek,

After seeing so many peer-reviewed studies documenting the costs of carbon pollution, it’s refreshing to encounter some out-of-the-box thinking to the contrary. You had us with your assertion that: “Even the most conservative estimates peg the social benefit of carbon-based fuels as 50 times greater than its supposed social cost.” We almost quit our jobs and joined the coal lobby. Who wouldn’t want to work so selflessly for the greater good?

Then we looked at the rest of your report. Your central argument seems to be: Cheap fuels emit carbon; cheap fuels are good; so, by the transitive property of Huh?!, carbon is good. Pithy arguments are fine, but circular ones aren’t.

First off, cheap fuels are good. Or more precisely, cheap and efficient energy services are good. (Energy efficiency, of course, is good, too. Inefficiency clearly isn’t.) Cheap energy services have done wonders for the United States and the world, and they are still doing so. No one here is anti-energy; we are against ruining our planet while we are at it.

The high cost of cheap energy

Yes, the sadly still dominant fuels—by far not all—emit carbon pollution. Coal emits the most. Which is why the cost to society is so staggering. Forget carbon for a moment. Mercury poisoning from U.S. power plants alone causes everything from heart attacks to asthma to inhibiting cognitive development in children. The latter alone is responsible for estimated costs of $1.3 billion per year by knocking off IQ points in kids. All told, coal costs America $330 to 500 billion per year.

Put differently, every ton of coal—like every barrel of oil—causes more in external damages than it adds value to GDP. The costs faced by those deciding how much fossil fuel to burn are much lower than the costs faced by society.

None of that means we shouldn’t burn any coal or oil. It simply means those who profit from producing these fuels shouldn’t get a free ride on the taxpayer. Conservative estimates indicate that carbon pollution costs society about $40 per ton. And yes, that’s a cost.

Socializing the costs is not an option

As someone with a Ph.D. in economics, Dr. Bezdek, you surely understand the difference between private benefits and social costs. No one would be burning any coal if there weren’t benefits to doing so. However, the “social benefits” you ascribe to coal are anything but; in reality they are private, in the best sense of the word.

If you are the one burning coal, you benefit. If you are the one using electricity produced by burning coal, you benefit, too. To be clear, these are benefits. No one disputes that. It’s how markets work.

But markets also fail in a very important way. The bystanders who are breathing the polluted air are paying dearly. The costs, if you will, are socialized. Society—all of us—pays for them. That includes those who seemingly benefit from burning coal in the first place.

Your claim that what you call “social benefits” of coal dwarf the costs is wrong in theory and practice. In theory, because they are private benefits. As a matter of practice because these (private) benefits are very much included in the calculations that give us the social costs of coal. What you call out as the social benefits of coal use are already captured by these calculations. They are part of economic output.

Our indicators for GDP do a pretty good job capturing all these private benefits of economic activity. Where they fail is with the social costs. Hence the need to calculate the social cost of carbon pollution in the first place.

So far so bad. Then there’s this:

Plants need carbon dioxide to grow, just not too much of it

In your report, you also discuss what you call the benefits of increases in agricultural yields from the well-known carbon dioxide fertilization effect. It may surprise you to hear that the models used to calculate the cost of carbon include that effect. It turns out, they, too, in part base it on outdated science that ought to be updated.

But their science still isn’t as old as yours. For some reason, you only chose to include papers on the fertilization effect published between 1902 and 1997 (save one that is tangentially related).

For an updated perspective, try one of the most comprehensive economic analysis to date, pointing to large aggregate losses. Or try this Science article, casting serious doubt on any claims that carbon dioxide fertilization could offset the impacts on agricultural yields from climate change.

Farmers and ranchers already have a lot to endure from the effects of climate change. There’s no need to make it worse with false, outdated promises.

Coal lobby speaks, industry no longer listens

It’s for all these reasons that, to borrow the apt title to the otherwise excellent New York Times story that ran your quote: “Industry Awakens to Threat of Climate Change”. And it’s precisely why the U.S. government calculates the social cost of carbon pollution. Yes, sadly, it’s a cost, not a benefit.

To our readers: Want to get involved? The White House has issued a formal call for public comments on the way the cost of carbon figure is calculated, open throughFebruary 26. You can help by reminding our leaders in Washington that we need strong, science-based climate policies.

Also posted in Economics, Science, Setting the Facts Straight / Read 1 Response

New Truck Efficiency Standards Are Great News for American Innovation

By Jason Mathers / Published: January 31, 2014

We’ve partnered with businesses, builders, and local communities to reduce the energy we consume. When we rescued our automakers, for example, we worked with them to set higher fuel efficiency standards for our cars. In the coming months, I’ll build on that success by setting new standards for our trucks, so we can keep driving down oil imports and what we pay at the pump.

– 2014 State of the Union Address

First, here’s the bad news:

Climate pollution from America’s heavy trucks is projected to increase by more than 130 million tons between now and 2040. That’s expected to be the largest increase in emissions from any single source.

The average new heavy-duty diesel truck sold last year got slightly less than six miles per gallon.

Most of these trucks travel upwards of 120,000 miles and burn more than $80,000 worth of fuel per year.

This inefficiency has real costs for our economy. We import millions of barrels of oil to fuel heavy-duty trucks. Businesses, both small and large, spend billions on the fuel needed to move freight. You and I pay for this too, when we buy those products.

Now here’s the good news:

It doesn’t have to be this way. We have the tools today that we need to change this.

We have the technology to decrease freight truck emissions. We can cut 20 percent off our current trajectories by 2030, and go much further by 2040.

In fact, a recent analysis by the American Council for an Energy-Efficient Economy found that it’s realistic to expect new trucks to achieve something approaching a 40 percent fuel consumption reduction, compared to 2010 trucks, within the next decade,

Well-designed federal standards can foster the innovation necessary to bring more efficient and lower emitting trucks to market. Manufacturers need to be confident in market demand in order to develop and launch efficiency improvements. Scaled production can drive down costs, further enhancing the payback truck fleets will experience through lower fuel bills.

EDF has set out a blueprint for rigorous greenhouse gas and fuel efficiency standards. Through smart, well designed policies and American innovation, we can cut climate pollution and save fuel costs while strengthening our security and winning the race to deploy clean energy technologies in the global marketplace.

Many companies already have developed — and are bringing to market — the tools we need to meet a strong standard.

Examples include:

Eaton, a manufacturer of truck transmissions — they’ve launched a powertrain package that can improve fuel efficiency by up to six percent.

Cummins, Inc. and Peterbilt Motors Co., which build truck engines and manufacture trucks, respectively – they partnered last year to build a truck that uses 50 percent less fuel than typical long-haul tractors, according to an article in the Indianapolis Star. It averaged 9.9 miles a gallon in road tests. They did this through a suite of improvements; including capturing otherwise wasted thermal energy.

Smart Truck Systems, a supplier of aerodynamic products to the trucking industry – they have a product that can cut fuel consumption from tractor-trailer combination trucks by over 10 percent through advanced aerodynamics.

Also available to us:

To understand the positive economic potential of adopting strong truck fuel efficiency standards, we only need to look back to the start of this month.

On January 1st, our nation’s biggest trucks became subject – for the first time ever – to fuel efficiency standards. These standards cover trucks from large pick-ups to tractor-trailers. They will cut climate pollution by almost 300 million tons while saving truck operators $50 billion.

For combination tractor-trailer trucks, these standards will cut annual fuel costs by more than $18,000 at today’s prices. The fuel savings will pay back the increase in upfront costs in less than five months.

Companies that rely on trucking to move goods stand to benefit significantly too. These companies will see a decrease of around eleven cents in the total cost-per-mile to move freight. Across their supply chain, large freight shippers will save millions of dollars each year because of this rule.

These are real savings that businesses, big and small, are starting to see in their bottom line today.

These first generation standards were created with the broad support of the trucking industry and many other key stakeholders. Among the diverse groups that supported the standards were the American Trucking Association, Engine Manufacturers Association and the Truck Manufacturers Association, the United Auto Workers — and of course EDF.

But this is just the beginning.

With the right political and commercial will, we can build on the partnership created during the development of the current standards to find common ground on the next phase of truck efficiency rules.

We can do this in a way that enables American businesses to thrive, cuts the need for imported oil by hundreds of millions of barrels a year, and slashes climate pollution by more than 100 million tons a year.

That’s why it was great to hear President Obama’s call to action in the State of the Union Address about the next phase of truck standards. We already knew that we could do it – now it looks like we will.

(Click here to read more about this issue, including EDF’s blueprint for rigorous greenhouse gas and fuel efficiency standards)

Also posted in Cars and Pollution, Economics, Policy / Comments are closed

The Silver Bullet Of Climate Change Policy

By Gernot Wagner / Published: January 24, 2014

(This post originally appeared on Forbes)

By Bob Litterman and Gernot Wagner

Whenever the conversation turns to climate change, someone is sure to opine that there’s no silver bullet. The issue is simply too complex to have one solution. When you focus on all the changes that need to occur to reduce greenhouse gas emissions globally it seems like a multifaceted approach is the only way forward.

Most of the world’s vexing problems share that feature. Mideast peace, nuclear non-proliferation, Eurozone stability, and plenty of other national security problems have no single right plan of attack. Some past plans might have brought us tantalizingly close to a seeming solution, but then reality started interfering once again, reconfirming the complexity of it all.

Climate change must surely be in that category. No single country, no single technology, no single approach can seemingly solve this one for us once and for all. Picking a single technology will almost inevitably end in some form of disappointment. Bureaucrats, the saying goes, ought not to try to pick winners. Leave that to venture capitalists for whom failure is a way of life. For every Apple and Facebook, there are dozens who never make it out of the garage. And clean technology doesn’t yet even have a single Apple and Facebook as the standout approach revolutionizing the field.

Source: NYU

It turns out, though, that how you frame the issue is crucial. If you think like an engineer there are dozens of challenges. If you think like an economist, there is one. It’s guiding the ‘invisible hand’. How can you create the appropriate incentive to decrease the pollution that’s causing climate change? For that, the government need not be in the business of picking winners at all. What it should—and can—do is identify the loser that’s been clear for decades: greenhouse gas pollution. And the solution is equally clear: create incentives to reduce emissions by pricing it. If we make this one change, most other actions that are needed will follow.

That’s what the European Union has done by capping carbon emissions from its energy sector, including large industrials, covering almost half of total carbon emissions. That’s what California is doing with over 80 percent of its total global warming emissions. It’s what China is experimenting with in seven city and regional trials, including in Beijing and Shanghai. All these systems put a price on greenhouse gas pollution.

On the other side of the ledger, there are still much larger incentives to consume fossil fuels in many other countries. The International Energy Agency estimates that global subsidies are well over $500 billion. These subsidies, which incentivize emissions, sadly dwarf the paltry incentives to reduce them. Free marketeers, small government advocates, and others who dislike distorting government subsidies should be appalled at the tax money poured into fossil fuels.

There’s one simple principle that’s been around in economics for so long that no economist worth his or her degree would question the conclusion: increase the price, watch the quantity demanded go down. It’s such a universal truism that economists call it the “Law of Demand.” Generations of graduate students have estimated the effects of price on demand for anything from the generic widget to demand for car miles driven. People may be irrational at times, but one thing that we know for sure is that they respond to incentives.

Everything we know from decades of the study of human behavior would lead us to believe that carbon pollution will go down as the price on emissions increases. The only interesting question is by how much.

The prescription then for anyone seriously concerned about climate change is simple: price carbon to the point where its now unpriced damages are incorporated into the price, and get out of the way. It’s simple. It works. It’s conservative to the core.

It’s also a silver bullet solution if there ever was one.

Bob Litterman is a Partner at Kepos Capital, LP. Gernot Wagner is a senior economist at the Environmental Defense Fund.

Also posted in Economics, Policy / Read 1 Response

A Milestone in a Vitally Important Clean Air Act Case Before the Supreme Court

By Pamela Campos / Published: January 23, 2014

This week, we saw another milestone in a vitally important Supreme Court case about the Clean Air Act and our environment.

On Tuesday, EDF and a coalition of environmental groups joined with the U.S. Environmental Protection Agency (EPA) and 15 states in filing briefs to defend EPA’s rules requiring new and rebuilt industrial sources to use cost-effective technology to limit climate pollution.

(The states are New York, California, Connecticut, Delaware, Illinois, Iowa, Maine, Maryland, Massachusetts, New Hampshire, New Mexico, Oregon, Rhode Island, Vermont, and Washington, plus the City of New York. You can read all the briefs here.)

In October, the Supreme Court denied review of EPA’s historic endangerment finding and clean cars standards, and granted review of a single question: whether EPA permissibly concluded that the regulation of greenhouse gas emissions from motor vehicles triggered the application of the Clean Air Act’s Prevention of Significant Deterioration (PSD) and Title V permitting programs to sources of greenhouse gases.

The permitting programs at issue – PSD and Title V – ensure that large new industrial sources use modern cost-effective solutions to mitigate climate pollution in the same way they have effectively addressed other pollutants under the nation’s clean air laws, and facilitate compliance with the entire range of Clean Air Act programs.

The Clean Air Act is clear that both programs apply to large sources emitting “any air pollutant,” and EPA’s regulations have required PSD and Title V permits for large sources of air pollutants subject to regulation for decades.

The petitioners in this case and those filing amicus briefs on their behalf, many of whom are tied to a $900 million effort to obstruct progress on climate and clean energy, want to upend these long-standing protections.

In the process, they present readings of the Clean Air Act that would exclude common-sense modern pollution controls for climate pollution — as well as hydrogen sulfide, sulfuric acid mist, and other air pollutants long regulated under our nation’s clean air laws.

The central theme in their arguments? Someday, EPA might apply these clean air protections to too many emissions sources.

So let’s take a look at greenhouse gas permitting over the last three years:

  • As of this writing, approximately 140 permits have been issued nationwide.
  • Permits cover industries ranging from iron and steel plants to cement plants to power plants.
  • Almost all states are handling their own greenhouse gas permitting.

Meanwhile, EPA is carefully considering next steps for greenhouse gas permitting requirements, including options for lowering the number of sources that might require permits in the future.

The next milestones in the case are coming up soon. Reply briefs are expected on February 15, and the Court will hear oral argument on Monday, February 24.

In the meantime, you can read more about the case here.

Also posted in Clean Air Act, EPA litgation, News, Policy / Comments are closed

Why the cost of carbon pollution is both too high and too low

By Gernot Wagner / Published: January 23, 2014

(This post originally appeared on EDF Voices)

Tell someone you are a “climate economist,” and the first thing you hear after the slightly puzzled looks subside is, “How much?” Show me the money: “How much is climate change really costing us?”

Here it is: at least $40.

That, of course, isn’t the total cost, which is in the trillions of dollars. $40 is the cost per ton of carbon dioxide pollution emitted today, and represents the financial impacts of everything climate change wreaks: higher medical bills, lost productivity at work, rising seas, and more. Every American, all 300 million of us, emit around twenty of these $40-tons per year.

The number comes from none other than the U.S. government in an effort to uncover the true cost of carbon pollution. This exercise was first conducted in 2010. It involved a dozen government agencies and departments, several dozen experts, and a fifty-page, densely crafted “technical support document,” replete with some seventy, peer-reviewed references and an even more technical appendix.

Cass Sunstein, the Harvard legal scholar of Nudge fame, who was co-leading the process for the White House at the time, recently declared himself positively surprised how the usual interest-group politics were all-but absent from the discussions throughout that process. This is how science should be done to help guide public policy.

The cost of carbon pollution is too low

The number originally reached in 2010 wasn’t $40. It was a bit more than half as much. What happened? In short, the scientific understanding of the impacts of rising seas had advanced by so much, and the peer-reviewed, economic models had finally caught up to the scientific understanding circa 2007, that a routine update of the cost of carbon number resulted in the rather dramatic increase to near $40 per ton. (There are twenty pages of additional scientific prose, if you want to know the details.)

In other words, we had been seriously underestimating the cost of climate change all along. That’s the exact opposite of what you hear from those who want to ignore the problem, and the $40 itself is still woefully conservative. Some large companies, including the likes of Exxon, are voluntarily using a higher price internally for their capital investment decisions.

And everything we know about the science points to the fact that the $40 figure has nowhere to go but up. The more we know, the higher the costs. And even what we don’t knowpushes the costs higher still.

Howard Shelanski, Sunstein’s successor as the administrator of the Office of Information and Regulatory Affairs (OIRA, pronounced “oh-eye-ruh”), has since presided over a further update of the official number. In fact, this one didn’t incorporate any of the latest science. It was simply a minor technical correction of the prior update, resulting in a $1 revision downward. (The precise number is now $37, though I still say $40 at cocktail parties, to avoid a false sense of precision. Yes, that’s what a climate economist talks about at cocktail parties.)

And once again, it all demonstrated just how science ought to be done: Sometimes it advances because newer and better, peer-reviewed publications become available. Sometimes it advances because someone discovers and fixes a small mathematical error.

Your input is needed

While announcing the correction, Shelanski added another layer of transparency and an opportunity for further refinements of the numbers: a formal call for public comments on the way the cost of carbon figure is calculated, open through January 27 February 26th.

We are taking this opportunity seriously. EDF, together with our partners at the Natural Resource Defense Council, New York University School of Law’s Institute for Policy Integrity, and the Union of Concerned Scientists, is submitting formal, technical comments in support of the administration’s use of the cost of carbon pollution number as well as recommending further revisions to reflect the latest science.

The bottom line, as economists like to put it, is that carbon pollution costs society a lot of money. So as the technical experts trade scientific papers, you can help by reminding our leaders in Washington that we need strong, science-based climate policies.

Update (on January 24th): The official comment period just was extended for another month, through February 26th. More time to show your support.

Also posted in Economics, Science, Setting the Facts Straight / Read 1 Response