Monday, August 31, 2009
On August 27, NAM and NFIB launched a multi-state, multi-million-dollar comprehensive advertising campaign opposing the American Clean Energy and Security Act (H.R. 2454, ACES), the House-passed Waxman-Markey climate change bill [See WIMS 6/26/09]. Joining in opposition are several state manufacturing associations in Indiana, Michigan, Missouri, Nebraska, North Dakota, Ohio and Virginia. The groups are encouraging manufacturers, small business owners and the public to "Speak Out" against the bill and its potentially devastating impact on the economy. The advertisements will run through September 4 and will include television, radio and Internet. The initial phase of the campaign will be conducted in the following states: Alaska, Arkansas, Indiana, Missouri, Michigan, Montana, Nebraska, North Carolina, North Dakota, South Dakota, Ohio, Virginia and West Virginia.
NAM Executive Vice President Jay Timmons said, “Our message to senators is that the Waxman-Markey bill is an ‘anti-jobs, anti-energy’ piece of legislation. It will shrink our nation’s economy, make us less competitive with foreign countries, raise energy costs for consumers and businesses, take away disposable income for Americans and cause significant job loss. Our country needs a growth strategy as we struggle to come out of the worst economic downturn since the Great Depression. What we do not need are policies and regulations that will cost millions of jobs and harm our overall economy.”
NFIB president and CEO Dan Danner said, “We’re very concerned about the impact of the legislation on small businesses. America’s job creators are struggling enough in this economy and don’t need additional burdens. Small business owners are not able to adjust the price of their goods and services quickly enough to match potentially steep energy cost increases without hurting their customer base. The Waxman-Markey bill would significantly raise energy-related costs and lead to considerable job losses.” Earlier this month, the NAM, in partnership with the American Council for Capital Formation (ACCF), released a study that assesses the impact the Waxman-Markey bill would have on manufacturing, jobs, energy prices and the overall economy [See WIMS 8/13/09]. NAM said the bill would cause losses in GDP up to $3.1 trillion (2012-2030); employment losses up to 2.4 million jobs in 2030; and increase residential electricity price increases up to 50 percent by 2030.
Throughout the month of August the API has been releasing state-specific information on what it calls "the devastating impact" of job losses and reduced household purchasing power if ACES were implemented. The information is results from an API-commissioned analysis by CRA International. Information release thus far includes the states of TX, NM, NC, OH, TN, IN, CO,MO, FL, ND, AK, ND, and SC.
On August 24, API release information from another analysis by global consulting firm EnSys Energy of the impact of ACES on the U.S. refining sector which they say indicates "that investment in U.S. refining capacity could plummet because the cost of doing business could soar." API said the study shows that the "United States will be more dependent on imports of gasoline and other petroleum fuels while U.S. refining production would be shifted overseas" if ACES becomes law.
API and many other business organizations are funding a nationwide coalition effort called "Energy Citizens" which says it is "voicing their concerns about the impact climate legislation passed by the U.S. House of Representatives would have on American jobs, families and businesses." Also, the U.S. Chamber has organized, The Alliance for Clear Climate Economics and Science Solutions (ACCESS) "to ensure that any regulation of greenhouse gases using existing environmental laws not harm the economy and American jobs."
On August 15, the U.S. Chamber announced that it was requesting that EPA conduct a formal on-the-record hearing on the evidence underlying its so-called "endangerment finding" under the Clean Air Act [See WIMS 4/27/09]. The Chamber said, "EPA wants to use the Clean Air Act to regulate CO2 emissions from cars. Before it can do this, EPA must first find, as a matter of law, that U.S. greenhouse gas emissions from new motor vehicles endanger U.S. public health and welfare. Because EPA has proposed that man-made greenhouse gas emissions cause or contribute to rising global temperatures, to make the endangerment finding EPA must now establish that the rising temperatures threaten public health and welfare—that is their burden of proof. EPA is, by all accounts, on the verge of answering this question in the affirmative. We don’t think the evidence EPA set forth meets the legal criteria to support such a finding, and we think a judge would agree with us."
Meanwhile, on August 28, the United Nations Secretary-General Ban Ki-moon today underscored the need for countries to "seal the deal" at the COP 15 climate change conference in Copenhagen in December. Ban said, “We have about three months until the [Conference] -- three months to reach an agreement that will determine the future of our planet.” The UN has launched "Global Climate Week" from September 21 to 25. Events are planned in more than 120 countries for this first Global Climate Week, which coincides with the summit on climate change, convened by Ban on September 22, in New York.
In an effort that attempts to counter the business groups' activity, Al Gore's Alliance for Climate Protection's (ACP) Repower America campaign, in partnership with the Blue Green Alliance and its labor and environmental partners, have embarked on a nationwide "Made in America Jobs" tour, highlighting the benefits to American workers and businesses of transitioning to a clean energy economy that will create millions of jobs. Maggie Fox, President and CEO of the Alliance for Climate Protection said, "The Alliance for Climate Protection and the Blue Green Alliance are crossing the country to show Americans -- through tours of clean energy businesses, conversations with workers making the parts that harness clean energy and rallies with local residents -- that the benefits of transitioning to a clean energy economy are available today through good-paying jobs which are giving new meaning to the term Made in America."
The Blue Green Alliance Launched by the United Steelworkers and the Sierra Club in 2006, now includes the Natural Resources Defense Council, Communications Workers of America, Service Employees International Union, Laborers' International Union of North America, Utility Workers Union of America and American Federation of Teachers. An article in today's [August 31] Washington Post suggests that environmental and labor groups may be losing the campaign delivering a much more subtle message and being far out-spent by the business groups (See links below).
Access a release from NAM (click here). Access links to individual state releases and reports from API (click here). Access a release and link to the API EnSys Energy study (click here). Access the Energy Citizens website and list of participating organizations (click here). Access the ACCESS website (click here). Access blog comments from the Chamber on its petition to EPA (click here). Access more Chamber comments and link to the complete 23-page petition (click here). Access the EPA docket on CO2 regulation EPA-HQ-OAR-2009-0171 (click here). Access a release from UN and link to further information (click here). Access a release from UNEP on the Climate Week initiative with links to additional information (click here). Access the Made In America tour schedule and information (click here). Access the Blue Green Alliance website (click here). Access the ACP website (click here). Access the Washington Post article (click here).
Friday, August 14, 2009
Aug 14: Following earlier more positive reports [See WIMS 8/13/09], at a sobering press briefing, Yvo de Boer, Executive Secretary of the UN Framework Convention on Climate Change (UNFCCC) reported that only “limited progress” was made at the most recent, week-long climate change talks in Bonn, Germany. The international negotiations are expected to culminate in December in Copenhagen with a new pact on slashing greenhouse gas emissions that will replace the Kyoto Protocol, whose first commitment period ends in 2012.
In an end of meeting press briefing de Boer stressed that "a climate deal in Copenhagen this year is an unequivocal requirement to stop climate change from slipping out of control." However, de Boer went so far as to say that, "while selective progress had been made to consolidate the huge texts on the table, at this rate, we will not make it.” With only two more conferences, totaling 15 days, scheduled before the start of the critical COP 15 meeting, he said, “negotiations will need to considerably pick up speed for the world to achieve a successful result at Copenhagen.” The next informal meetings, prior to Copenhagen, are scheduled for Bangkok from September 28 to October 9, and Barcelona from November 2 to 6.
De Boer indicated that some accomplishments were made in the areas of adaptation, technology and capacity building, however, other issues such as how mid-term (2020) emission reduction pledges of industrialized countries could be translated into legally binding targets as a key component of the Copenhagen deal continue to be more difficult. He said, "Industrialized countries need to show a greater level of ambition in agreeing to meaningful mid-term emission reduction targets. The present level of ambition can be raised domestically and by making use of international cooperation. We also need a clear indication of the finance and technology industrialized countries are ready to provide to help developing countries green their economic growth and adapt to the impacts of climate change."
He continued, saying, "In the context of the G8 and Major Economies Forum, I see a group of countries considering actions that would allow them to profit from the boom in clean technology. The question is how all nations can profit from this development. Poorer countries risk being left by the wayside without access to technology and finance. International cooperation needs to provide them with the means to enable them to green their economies and to adapt to the inevitable effects of climate change. In order for that support to be financed, I believe that countries need to be more specific about what they want supported and how."
In addition to the two informal work meeting mentioned above, a major opportunity for all Heads of State and governments of the world to provide clear political guidance to negotiators ahead of the UN Climate Change Conference in Copenhagen will be the UN Secretary-General’s Climate Change Summit for world leaders September 22 in New York. The New York meeting will assemble Heads of State and Government from all 192 Parties to the UNFCCC.
The World Resources Institute (WRI) has prepared a useful 77-page tabulated summary of the various country/Party submissions for consideration that have been made from August 2008 through August 2009. Section I contains submissions as they relate to measurable, reportable and verifiable (MRV) support and actions; Section II contains submissions related to shared vision; Section III contains the legal aspects of proposals for an agreed outcome; Section IV contains submissions on finance; and Section V summarizes submissions on technology. WRI indicates that the table summaries represent WRI’s interpretation of a selection of Party submissions, and do not necessarily reflect the complete views of the Parties.
Access a closing release on the UNFCCC meeting (click here). Access a webcast of the de Boer closing press briefing (click here). Access complete information on the current meetings and on-demand webcasts (click here). Access the UNFCCC website for more information (click here). Access details of five proposals by Parties for a protocol to the Convention (click here), including a draft 23-page implementing agreement from the U.S. (click here); and twelve proposals by Parties for amendment to the Kyoto Protocol (click here). Access the complete WRI summary of submissions (click here).
Thursday, August 13, 2009
The study, which was commissioned by NAM and ACCF and conducted by Science Applications International Corporation (SAIC) using NAM and ACCF input assumptions, assesses the impact of the Waxman-Markey Bill on manufacturing, jobs, energy prices and our overall economy. The NAM and ACCF released national data as well as the analysis for 15 industrial states that would be impacted greatly if this or similar legislation is signed into law. NAM said the full report, including the data covering the remaining 35 states will be released in the coming weeks.
The NAM/ACCF study is in addition to other recent studies on the economic impacts of climate legislation. On August 4, the Energy Information Administration (EIA) released a report -- Energy Market and Economic Impacts of H.R. 2454 [See WIMS 8/5/09]. On June 22, the Congressional Budget Office (CBO) released an analysis of the potential effects on households of the cap-and-trade program that would be implemented pursuant to H.R. 2454 [See WIMS 6/23/09]. Also, on June 23, U.S. EPA released a new 53-page report with a 107-page appendix entitled, EPA Analysis of the American Clean Energy and Security [ACES] Act of 2009 H.R. 2454 in the 111th Congress [See WIMS 6/24/09].
Jay Timmons, executive vice president of the NAM said, “Climate change is a very complex issue and I hope Senators will look closely at this study as they consider climate change legislation this fall. At a time when our country is struggling to come out of our longest and deepest economic downturn since the Great Depression, lawmakers should be focused on policies that provide incentives for businesses so they can create jobs and grow. Unfortunately, this study confirms that the Waxman-Markey Bill is an ‘anti-jobs, anti-growth’ piece of legislation. Further, leaders of countries such as China and India have made it clear they have no intention of reducing their own emissions. Waxman-Markey would give an edge to overseas competitors, discouraging domestic investment and the creation of American jobs.”
According to a release from NAM, the NAM/ACCF study accounts for all Federal energy laws and regulations currently in effect. It accounts for increased access to oil and natural gas supplies, new and extended tax credits for renewable generation technologies, increased World Oil Price (WOP) profile, as well as permit allocations for industry and international offsets. Additionally, the provisions of the stimulus package passed in February are included in this study.
Key findings of the NAM/ACCF study include: Cumulative Loss in Gross Domestic Product (GDP) up to $3.1 trillion (2012-2030); Employment losses up to 2.4 million jobs in 2030; Residential electricity price increases up to 50 percent by 2030; and Gasoline price increases (per gallon) up 26 percent by 2030.
Dr. Margo Thorning, senior vice president and chief economist for ACCF said, “This data shows that we cannot divorce the environmental impacts from potential economic damages. Policymakers may have the best of intentions when it comes to the environment, but it’s crucial that we compare the economic cost to the legislation’s actual impact on global GHG reductions. Considering that developing countries such as China and India have publicly stated that they will not undertake similar emissions policies, there would be almost no global environmental benefits from the bill. Ultimately, this study shows that Waxman-Markey, would significantly decrease employment and increase energy prices at a time when we can least afford it.”
The study also indicates that industrial states would be "disproportionately impacted by high energy prices, loss of jobs and income." The 15 states analyzed in the initial study include: AR; IL, IN; IA; KY; MI; MN; MO; NC; OH; PA; TN; VA; WV; AND WI. SAIC used a modified version of the National Energy Modeling System, NEMS/ACCF-NAM 2, and the NAM and ACCF input assumptions, to quantify the impact of the Waxman-Markey bill.
In advance of the NAM/ACCF study, the Environmental Defense Fund (EDF) issued a release providing links to several contradictory studies. EDF said, "NAM/ACCF's study from last year, which was seriously flawed. It looked at the earlier Lieberman-Warner bill, but it ignored important provisions of the legislation and imposed artificial constraints on the economy's ability to reduce emissions."
Access a release from NAM (click here). Access links to the national and 15 state-by-state economic impacts as well as a PowerPoint presentation and executive summary and more (click here). Access a release from EDF with links to additional studies (click here). Access EPA's website for various climate change legislation economic analyses (click here).
Wednesday, August 12, 2009
The article seeks to bring the peak oil debate into focus. The author notes that a number of factors cloud the energy outlook: Estimates of remaining resources are typically given as a range of probabilities and are thus open to interpretation. Variations also occur in estimates of future oil production and in the ways countries report their reserve data. The lack of a common definitional framework also confuses the debate. The author provides definitions of frequently used terms, delineating types of reserves and conventional versus nonconventional resources. The article also discusses how technological innovations, government policies, and prices influence oil production.
The article concludes, ". . .regardless of the exact timing of peak oil production -- be it this year or fi fty years down the road --
the world faces the challenge of adapting to a new model of energy supply. Although the peak oil literature tends to concentrate heavily on the scenarios of peaking world oil production, the true underlying issue is a fear that the transition from conventional oil to substitutes will be expensive and chaotic, leaving insuffi cient time for supply substitution and adaptation.
"This adaptation process -- which involves using more renewable resources and conservation and developing new technology and processes to better access hydrocarbon deposits and more effi ciently extract and refi ne nonconventional sources -- has already begun. But the road to the future energy balance -- one with dwindling amounts of conventional oil -- is far from mapped out.
"It is possible that the world’s vast endowments of hydrocarbon resources will be heavily relied upon to answer this growing call for substitutes for the conventional oil supply. However, there is also potential for an energy future largely diversified away from hydrocarbon use. Most likely, future energy sources will be a combination of the two. Perhaps the peak oil literature would better serve society by being more solution-oriented, focusing on discovering the best way to transition to a world with less conventional oil rather than locking horns about discrepancies in terminology."
Access the complete article (click here).
Tuesday, August 11, 2009
As WIMS has previously noted on Mar 18, 2009, a group of 15 Senators -- 14 "moderate" Democrats and Joe Lieberman (I-CT) announced they were forming a coalition to help shape public policy that will have a major impact on pending proposals for environmental, energy and climate change legislation [See WIMS 3/19/09]. The original Group of 15, including some strong supporters of President Obama lead by Bayh of Indiana, Tom Carper (D-DE) and Blanche Lincoln (D-AR); and also included Mark Udall (D-CO); Michael Bennet (D-CO), Mark Begich (D-AK); Kay Hagan (D-NC); Herb Kohl (D-WI); Mary Landrieu (D-LA); Joe Lieberman (I-CT), Claire McCaskill (D-MO); Ben Nelson (D-NE); Bill Nelson (D-FL); Jeanne Shaheen (D-NH); and Mark Warner (D-VA). Comparing the original group of 15, with the new coalition of 10 Senators, it now appears that the "moderate" group has become much larger and will have an even greater influence on any energy and climate change legislation.
In the August 6 letter the senators wrote, “As Congress considers energy and climate legislation, it is important that such a bill include provisions to maintain a level playing field for American manufacturing. We must not engage in a self-defeating effort that displaces greenhouse gas emissions rather than reducing them and displaces U.S. jobs rather than bolstering them. Domestic manufacturers and the workers they employ can and must play a vital role in our nation’s clean energy future.”
The Senators also outlined initiatives to ensure manufacturers are not disproportionately affected by climate change legislation. They said, “Any climate change legislation must prevent the export of jobs and related greenhouse gas emissions to countries that fail to take actions to combat the threat of global warming comparable to those taken by the United States. It is essential that climate change legislation include a border mechanism, sufficient allowances to energy intensive industries and other effective measures that encourage international agreements and maintain a level playing field for American manufacturers.”
Access a release from Senator Bayh (click here). Access the Aug. 6 letter from the Senators (click here). Access a revealing March 2009 "Hardball" interview with Senator Evan Bayh (click here).
Friday, August 07, 2009
Senate Majority Leader Harry Reid (D-NV) released a statement saying, “Cash for Clunkers is an extraordinarily popular program that is a good example of a public-private partnership where both consumers and business win, and one that contributes to Americans’ confidence in our continuing economic recovery. This program gives a much needed jolt to our economy and our manufacturers at a critical time. Retiring and recycling older, less efficient cars and trucks and replacing them with higher fuel economy models reduces oil consumption and air pollution. Beyond helping our domestic auto industry, this program will stimulate other sectors of the auto supply chain like mechanics and auto parts manufacturers.”
Senator Snowe issued a statement saying, “I believe it is unfortunate that we hastily approved this program in the first place. This rush explains the difficulties experienced by our dealers in Maine; hour-long waits to approve a single transaction, the consistent crashing of government websites, and a lack of clarity in terms of how much money has been spent. Yet, our auto dealers are fronting the cost of this program, and are participating in good faith with the expectation they will be reimbursed; Congress cannot afford to let them down.”
Senator Lamar Alexander (R-TN) said, "This program obviously stimulates the economy, and the money to pay for it comes from the earlier stimulus bill that isn’t working. It is especially important in Tennessee where one out of every three manufacturing jobs is auto-related. I strongly oppose any effort now or in the future to pay for ‘cash for clunkers’ by adding to the debt.”
Senator Carl Levin (D-MI) delivered a statement on the Senate floor just prior to the vote saying, "Rarely has this body passed legislation that has so clearly and quickly met our goals than when it approved the first installment of money for this program earlier this summer. The program offered rebates of $3,500 or $4,500 for consumers who traded in old, inefficient vehicles for new cars or trucks with higher mileage. Thousands of consumers who hoped to take advantage now wonder if they will have the opportunity. . . The impact has been so striking that one private economist has raised his estimate for economic growth in the third quarter of this year by more than 50 percent, based solely on the success of 'cash for clunkers.'
"This program accomplished what it was intended to accomplish. In just a few days, a quarter of a million Americans traded in their old car for a new model using the credits available from this program. That’s a quarter of a million American families that more fuel-efficient transportation; a quarter of a million transactions that will pump new money into local economies; and an incalculable boost to this nation’s struggling auto industry. . ."
Senator Levin reminded members that while some amendments may be "well intentioned. . . any amendment that is adopted here would be the death knell for this program. It would have to end immediately because of the uncertainty over whether any funds remain."
Senator Claire McCaskill (D-MO), one of four Democrats to vote against the bill, posted her rationale in advance of the vote saying, "Of course the cash for clunkers program is popular, we’re giving away money. My concerns are first, that we are just moving demand around, and that the sales in this program are robbing sales from 2, 3, or 12 months from now when we are going to still need sustained growth in our economy. Remember, around 60,000 to 70,000 people are trading their cars in for new ones every month without this program. Second, I haven’t yet gotten clear answers on how many deals are currently in the pipeline and how they will wind this program down in a way that will give certainty to buyers and dealers. Third, I’m worried that an extension right now will penalize the two companies that we just made huge taxpayer investments in. I’m trying to verify, but I believe, based on my conversations with dealers and other research, that Chrysler and GM both have inventory issues with the cars that qualify for this program. . ."
Access the Senate roll call vote on H.R. 3435 (click here). Access the statement from Senator Reid (click here). Access the statement from Senator Snowe (click here). Access the statement from Senator Alexander (click here). Access the floor statement from Senator Levin (click here). Access a release from Senator McCaskill explaining her no vote on August 4 (click here). Access legislative details for H.R. 3435 (click here). Access the CARS website for additional information (click here).
Thursday, August 06, 2009
The SPP is co-chaired by former Rep. Sherwood Boehlert (R-NY), past chair of the House Science Committee, and Donald Kennedy, former editor of Science; and eleven other ideologically diverse members from business, academia, government and non-profits. Boehlert said, "The fundamental theme of the report is that the Administration needs to put in place procedures to try to distinguish science questions from policy questions. Often, policy disputes are cast as fights over science. This damages the credibility of science and obscures the real issues that ought to be debated. For example, how much risk a substance poses to human health or the environment is a science question; how much risk is acceptable is a policy question."
The report recommends requiring new information when regulations are proposed by agencies such as U.S. EPA and the FDA, and enhancing the credibility of Federal advisory committees to ensure the integrity of science in regulatory policymaking. Many of these recommendations are relevant to the White House and Federal agency effort to implement President Obama's March 9, 2009 Presidential Memorandum on Scientific Integrity [See WIMS 3/10/09]. An interim version of the SPP report was released in March, and the White House has reviewed that report as part of its work to issue guidelines on scientific integrity and regulatory reform, which are expected soon. The report's recommendations include:
- Clarity regarding key science questions needed to write specific regulations. Federal Register notices for proposed regulations should make clear what science questions and what policy questions needed to be answered to formulate the regulation and what science was most influential in drafting the regulation. The notices might also make clear what additional science would help resolve remaining questions and might offer policy alternatives that are consistent with the science.
- Greater focus on science in advisory committees. Federal agencies should empanel scientific advisory committees – committees that are composed solely of members with relevant scientific expertise – to address science questions relevant to policy, and those panels should not make policy recommendations. Members of such committees should be Special Government Employees, a category that makes them subject to conflict of interest and other ethics rules.
- Greater transparency in committee appointment process. The process for appointing committees should be more transparent, with agencies taking steps including seeking names through the Web and asking for comments on proposed individuals on the Web.
- More disclosure by committee members. Members of scientific advisory committees should be required to disclose to the government and to the public far more information on their backgrounds than is currently the case so the government and the public can evaluate their qualifications and determine whether their service raises any concern about conflicts of interest or bias.
- Clearer conflict of interest rules. The government should set clear rules about what constitutes a conflict of interest for a member of a scientific advisory committee. The government should distinguish clearly between conflict of interest and bias.
- Greater transparency in committee selection might allow a limited number of closed committee meetings. If procedures are put in place to make the selection of advisory committee members more transparent, then the government could consider allowing scientific advisory committees to have a limited number of closed meetings under specific circumstances.
- Transparency in the use of scientific literature. The process agencies and scientific advisory committees use to review the scientific literature should become more transparent and thorough. In general, papers that have not been peer reviewed should be treated with skepticism, but they should not be automatically excluded.
- Legitimate use of Confidential Business Information. The Confidential Business Information designation, which limits public access to information, is legitimate but appears to be overused.
- Greater participation in, and improved quality of peer review. Federal agencies, universities and scientific journals need to experiment with ways to encourage more scientists to act as peer reviewers and to experiment with different peer review procedures to see what will improve the quality of reviews.
The Science for Policy Project is funded by the David and Lucile Packard Foundation, the William and Flora Hewlett Foundation, and ExxonMobil Foundation. The project was directed by David Goldston, the former chief of staff of the House Science Committee.
Access a release from BPC (click here). Access the complete 47-page report (click here). Access the BPC website for more information (click here).
Wednesday, August 05, 2009
EIA says the cap-and-trade program for greenhouse gas (GHG) emissions, which covers roughly 84 percent of total U.S. GHG emissions by 2016, is in many respects the centerpiece of the bill and the primary driver of the results presented in this report. The program subjects covered emissions to a cap that declines steadily between 2012 and 2050. The cap requires a 17- percent reduction in covered emissions by 2020 and an 83-percent reduction by 2050, both relative to a 2005 baseline. The cumulative GHG emissions covered by the Title III cap-and-trade program over the 2012 to 2030 period are estimated to be 113.4 billion metric tons (BMT) in CO2-equivalent terms.
EIA lists the key provisions of ACES that are represented in the policy cases developed in this analysis include: the GHG cap-and-trade program for gases other than HFCs, including provisions for the allocation of allowances to electricity and natural gas distribution utilities, low-income consumers, State efficiency programs, rebate programs, energy-intensive industries, and other specified purposes; the combined efficiency and renewable electricity standard for electricity sellers; the carbon capture and storage (CCS) demonstration and early deployment program; Federal building code updates for both residential and commercial buildings; Federal efficiency standards for lighting and other appliances; technology improvements driven by the Centers for Energy and Environmental Knowledge and Outreach; and the smart grid peak savings program.
EIA prepared a range of analysis cases for the report. The six main analysis cases discussed in the Executive Summary, while not exhaustive, focus on two key areas of uncertainty that impact the analysis results: The role of offsets is a large area of uncertainty in any analysis of ACES; and the other major area of uncertainty in assessing the energy system and economic impacts of ACES involves the timing, cost, and public acceptance of low- and no-carbon technologies. Several key findings include:
- Given the potential of offsets as a low-cost compliance option, the amount of reduction in covered emissions is exceeded by the amount of compliance generated through offsets in most of the main analysis cases. Cumulative compliance between 2012 and 2030, including reductions both in domestic emissions of covered gases and in domestic and international offsets, ranges from 24.4 BMT to 37.6 BMT carbon dioxide (CO2)-equivalent emissions in the main analysis cases, representing a 21-percent to 33-percent reduction from the level of cumulative covered emissions projected in the Reference Case.
- The vast majority of reductions in energy-related emissions are expected to occur in the electric power sector. Across the ACES main cases, the electricity sector accounts for between 80 percent and 88 percent of the total reduction in energy-related CO2 emissions relative to the Reference Case in 2030.
- If new nuclear, renewable, and fossil plants with CCS are not developed and deployed in a timeframe consistent with emissions reduction requirements under ACES, covered entities are expected to respond by increasing their use of offsets, if available, and by turning to increased natural gas use to offset reductions in coal generation.
- Emissions reductions from changes in fossil fuel use in the residential, commercial, industrial and transportation sectors are small relative to those in the electric power sector. Taken together, changes in fossil fuel use in these sectors account for between 12 percent and 20 percent of the total reduction in energy-related CO2 emissions relative to the Reference Case in 2030.
- GHG allowance prices are sensitive to the cost and availability of emissions offsets and low-and no-carbon generating technologies. Allowance prices in the ACES Basic Case are projected at $32 per metric ton in 2020 and $65 per metric ton in 2030. Across all main analysis cases, allowance prices range from $20 to $93 per metric ton in 2020 and from $41 to $191 (2007 dollars) per metric ton in 2030 (Figure ES-3). The lower prices in the range occur in cases where technological options such as CCS and adoption of new nuclear power plants can be deployed on a large scale before 2030 at relatively low costs.
- ACES increases energy prices, but effects on electricity and natural gas bills of consumers are substantially mitigated through 2025 by the allocation of free allowances to regulated electricity and natural gas distribution companies. Except for the ACES No International/Limited Case, electricity prices in five of the six main ACES cases range from 9.5 to 9.6 cents per kilowatt-hour in 2020, only 3 to 4 percent above the Reference Case level. Average impacts on electricity prices in 2030 are projected to be substantially greater, reflecting both higher allowance prices and the phase-out of the free allocation of allowances to distributors between 2025 and 2030. By 2030, electricity prices in the ACES Basic Case are 12.0 cents per kilowatt-hour, 19 percent above the Reference Case level, with a wider band of 11.1 cents to 17.8 cents (10 to 77 percent above the Reference Case level) across all six main policy cases.
ACES increases the cost of using energy, which reduces real economic output, reduces purchasing power, and lowers aggregate demand for goods and services. The result is that projected real gross domestic product (GDP) generally falls relative to the Reference Case. Total discounted GDP losses over the 2012 to 2030 time period are $566 billion (-0.3 percent) in the ACES Basic Case, with a range from $432 billion (-0.2 percent) to $1,897 billion (-0.9 percent) across the main ACES cases.
Consumption and energy bill impacts can also be expressed on a per household basis in particular years. In 2020, the reduction in household consumption is $114 (2007 dollars) in the ACES Basic Case, with a range of $26 to $308 across all main ACES cases. In 2030, household consumption is reduced by $288 in the ACES Basic Case, with a range of $133 to $722 per household across all main ACES cases.
The report notes that the modeling horizon for this analysis ends in 2030. Unless substantial progress is made in identifying low- and no-carbon technologies outside of electricity generation, the ACES emissions targets for the 2030-to-2050 period are likely to be very challenging as opportunities for further reductions in power sector emissions are exhausted and reductions in other sectors are thought to be more expensive.
Environmental Defense Fund (EDF) issued a release say the EIA report indicates that "for $83 per year per household – or a dime a day per person we can solve climate change, invest in a clean energy future, and save billions in imported oil." EDF indicated that the EIA analysis "has similar findings to two other impartial and substantive studies done recently, from the Environmental Protection Agency and the Congressional Budget Office." EDF said, "This analysis confirms what every other credible study has found, and it -- once again -- refutes the widely reported scare tactics about the cost of the cap and trade bill. Opponents of action will always try to cherry-pick the numbers and use models with biased assumptions. The EPA, EIA and CBO are the non-biased standard for economic analysis."
Access the complete report or individual sections as well as spreadsheets and appendices (click here). Access the EDF release (click here).
Tuesday, August 04, 2009
Chairman Baucus explained that most major climate change bills place a limit -- or “cap” -- on carbon dioxide. Companies subject to the cap must buy permits -- often called “allowances” -- to emit greenhouse gases. One key issue in such a system is: How much of these allowances should the government sell at auction? And how much should the government give away for free?
He said, "Economists expect that these allowances will have a value, like cash. Thus, many argue that the government should not just give these allowances away. Many argue that the government should auction them, and return the proceeds to consumers. Others argue that the government should allocate a portion of the allowances to regulated companies. Doing so would soften the effects of putting a price on carbon." Under the House-passed, H.R. 2454 (ACES), at the outset, the government would freely allocate about 85 percent of the emission allowances.
Baucus indicates that, "Allowances will have significant value. In 2012, the first year of the program in the House‐passed bill, the Congressional Budget Office [CBO] puts their value at about $60 billion. For the period of 2010 to 2019, they amount to more than $870 billion." Baucus cites the CBO which says, “[T]he creation of allowances by the government should be recorded as revenues. That logic does not hinge on whether the government sells or, instead, gives away the allowances. Allowances would have significant value even if given away because the recipients could sell them or, in the case of a covered entity, use them to avoid incurring the cost of compliance.”
Baucus said that there are a number of ways to use allowance revenues to mitigate the cost of climate legislation on consumers and businesses. He cited for example, that "Congress could use the money from auctioning allowances to cut taxes: by cutting marginal rates, by cutting capital gains rates, by cutting payroll taxes. Or we could do all of the above. . . Congress could compensate consumers through rebates or fixed payments per‐capita. . . We could also devote allowance proceeds to helping low‐income Americans. We could expand the Earned Income Tax Credit. . . The House bill provided solid relief to low‐income Americans through these means. The Senate should match it, or build on it. Still another approach would be to dedicate a share of revenues to investment in energy efficiency."
Ranking Member Grassley said, "The President supports 100 percent auction of allowances." He cited, Treasury Secretary Geithner's testimony before the House Budget Committee earlier this year when he said, “This program should include a
100 percent auction of emissions allowances -- ensuring that the biggest polluters don't profit on the basis of past pollution…” He also cited Dr. Peter Orszag, OMB Director who said, “…if you didn’t auction the permit, it would represent the largest corporate welfare program that has ever been enacted in the history of the United States.”
Grassley said, "the allowance value. . . is in effect a national energy tax on all Americans -- one that will exacerbate the negative impact of other taxes on economic growth and jobs. This means that above all, we have a responsibility to mitigate, as much as possible, those painful effects on the American people."
GAO testified that, "The method for allocating allowances in a cap-and-trade program can have significant economic implications for the government, regulated entities, and households. Most importantly, a cap-and-trade system would create a market for a valuable new commodity: emissions allowances."
GAO indicated "A cap-and-trade program would increase the cost of burning fossil fuels and other activities that generate emissions and potentially raise costs for consumers. A key decision is the extent to which the government offsets these costs. For example, the government could sell the allowances and then return the revenues to covered entities or households. The government could also give away some or all of the allowances. According to the Congressional Budget Office, the value of the allowances could total $300 billion annually by 2020. Today’s testimony provides preliminary results of ongoing work assessing the potential effects of (1) allowance allocation methods, and (2) options for distributing program revenues or the economic value of allowances."
RFF testified that, "A simple per-household rebate of allowance revenue raised by the government through auction, coupled with a more moderate allocation to local distribution companies, can achieve distributional and regional goals at less cost and with greater administrative simplicity and predictability." AEI said, "Auctioning the allowances can address both the efficiency and distributional concerns, if the auction proceeds are properly used. Marginal tax rates can be reduced and compensation can be provided to vulnerable consumers."
EDF testified that, "The principles are straightforward: Protect consumers. Preserve and strengthen American competitiveness. And invest in the transition to a new, growing clean-energy economy. . . My conclusion is that the House bill strikes a sound balance, with the appropriate emphasis on the individual American family. Indeed, what is commonly overlooked is the extent to which HR 2454 channels allowance value to households . fully 43% of the total value over the life of the program."
Access a webcast of the hearing (click here). Access the hearing website for links to opening statement and all testimony (click here).
Monday, August 03, 2009
Some Senators are arguing that the program is simply another auto company "bailout" while, others are arguing that requirements of the program should be insisting on upgrading to cars with better gas mileage. The Senate is expected to vote on the measure this week before it adjourns for the August recess. The CARs website reports that the program is still operating, but it is expected to be out of funds very soon.
The House voted 316 to 109 on July 31 to extend the program with an additional $2 billion in funding. The funding authorization is included in H.R. 3435, a supplemental appropriations bill for fiscal year 2009 for the Consumer Assistance to Recycle and Save Program. The 316 votes from approval consisted of 239 Democrats and 77 Republicans. 95 Republicans and 14 Democrats voted against the passage. The House Republican Leader John Boehner (R-OH) voted against the measure.
Senator John McCain (R-AZ) called the House approval of the $2 billion extension "another outrageous act of generational theft!" and said he "will oppose any move to take up the House bill." Senator Jim DeMint (R-SC) indicated he will support McCain's effort to defeat the bill. Senator Claire McCaskill (D-MO) has indicated she will support no "new" spending for cash for clunkers. She may support if it is funding already appropriated for stimulus, but she wants to see how the program will be ended.
Senator George Voinovich (R-OH) Ranking Member of the Senate Transportation and Infrastructure Subcommittee, the Subcommittee on Clean Air, Climate Change and Nuclear Safety and co-chair of the Senate Auto Caucus, praised the House approval of funds to continue the program. Senator Voinovich was a co-sponsor of the original legislation creating the program, with Sens. Debbie Stabenow (D-MI) and Sam Brownback (R-KS).
Senators Dianne Feinstein (D-CA) and Susan Collins (R-ME), Charles Schumer (D-NY), Thomas Carper (D-DE), and Bill Nelson (D-FL) are all among a group of Senators calling for the program to require the purchase of new cars which get better gas mileage.
Senator Voinovich said, “I am glad the House passed an additional $2 billion to fund the cash for clunkers program, which I co-sponsored with Sen. Stabenow and Brownback. As is evident from the extraordinary response to the program, it is a win-win -- it will stimulate our American economy, provide much needed jobs and it will promote fuel efficient cars to benefit our environment. I am thankful the House understood that this money should be taken from the already-enacted stimulus bill, which I voted against earlier this year. Unfortunately, programs such as ‘cash for clunkers,’ as well as robust highway and infrastructure spending were not part of the original stimulus proposal. This type of investment provides not only jobs, but tangible assets for taxpayer dollars. I look forward to this program making its way to our American citizens to reinvigorate jobs for our auto workers, especially in Ohio during these hard economic times.”
President Obama issued a statement on July 31, following the House approval of funding expansion and said, ""I want to thank leaders in the House of Representatives for working quickly and in a bipartisan way to pass legislation that will use Recovery Act funds to keep 'Cash for Clunkers' going. This program has been an overwhelming success, allowing consumers to trade in their less fuel efficient cars for a credit to buy more fuel efficient new models. It has given consumers a much needed break, provided the American auto industry an important boost, and is achieving environmental benefits well beyond what was originally anticipated. The program has proven to be a successful part of our economic recovery and will help lessen our dangerous dependence on foreign oil, while reducing greenhouse gas emissions and improving the quality of the air we breathe. I urge the Senate to act with the American consumers in mind to pass this important legislation."
Access the House roll call vote (click here). Access a release from Senator Voinovich (click here). Access a Twitter statement from Senator McCain (click here). Access a Twitter statement from Senator McCaskill (click here). Access a release and the DOT letter from Senators Feinstein and Collins(click here); and another release (click here). Access the Fox News report with comments from Senator McCain (click here). Access the CARS website for additional information (click here). Access a release from the President (click here). Access legislative details for H.R. 3435 (click here).