A pair of new federal air pollution regulations could result in the closure of up to 69 aging, inefficient coal-fired power plants, simultaneously reducing both harmful air pollutants and driving a 1.4 to 4.4 percent reduction in total US electric power sector CO2 emissions, according to a Breakthrough Institute analysis.
Updated: This post was originally published on January 1, 2012. It was updated on January 27, 2012 to reflect the announced closure of six coal-fired power plants in Ohio, Pennsylvania, and Maryland.
Two new federal air pollution regulations are expected to spur the closure of up to 69 aging, inefficient, coal-fired power plants, reducing both harmful air pollutants and emissions of the climate destabilizing greenhouse gas, carbon dioxide (CO2), according to an AP survey of US power plant operators and a preliminary Breakthrough Institute analysis of the likely impacts on CO2 emissions.
According to the AP survey, 31 coal-fired electricity generating units at power plants in a dozen states are expected to close rather than face costly upgrades to comply with a pair of new EPA regulations designed to curb emissions of smog-forming pollutants and toxic smoke stack emissions. These plants are joined by four plants in Ohio that were formerly classified by the AP survey as "at risk for closure" and two plants in Pennsylvania and Maryland that were not on AP's list. These units have a combined nameplate capacity of 15,532 megawatts.*
Up to 32 additional coal-fired units with a combined 9,714 megawatts of capacity may also decide to close, as the costs of compliance with the EPA's recently enacted Cross-State Air Pollution Rule, designed to curb air pollution in states downwind from coal-fired power stations, and the new Mercury and Air Toxics Rule announced this week both take effect.
While the purpose of these regulations is to reduce harmful pollutants and improve public health, closure of these aging plants will also lead to a 1.4 to 4.4 percent reduction in US electric power sector emissions of carbon dioxide (CO2), according to an analysis completed by the Breakthrough Institute. These air pollution regulations are thus a prime example of the ongoing success of pragmatic, "oblique" strategies to reduce greenhouse gas emissions.
It is time to take stock of our current climate trajectory, and consider what it means for climate policy. In Part 1 of this week long series, we argued that our current climate trajectory means we must 1) redouble efforts to reduce CO2 emissions as quickly as possible, and 2) we must proactively build resilience to the uncertain impacts of a changing climate. Part 2 examined why voluntary economic contraction is a not a viable strategy for reducing emissions “as quickly as possible.” Part 3 explains why implementing a robust clean energy innovation strategy is the key way to making clean energy cheaper than fossil fuels, thus enable rapid adoption of low-carbon energy sources and drastically reducing CO2 as quickly as possible.
As we wrote in Part 1 and Part 2 of this series, our current climate trajectory and global political economy dictates that the only way we can limit potentially dangerous climate change impacts, above the dangerous impacts we’re already locked into, is to redouble efforts to reduce global CO2 emissions as quickly as possible. To rapidly decarbonize the economy requires greatly accelerating the replacement of fossil fuels with low or zero-carbon clean energy substitutes. Implementing the right strategies to do so raises numerous stark policy choices and issues.
The most fundamental issue is that energy is largely a fungible commodity – the electricity coming out of your wall socket doesn’t have any immediately tangible differences whether it comes from a coal plant or a wind farm. The only immediate difference is cost. This key reality means that the rate of adoption for new clean energy technologies is largely moderated by two principal levers:
(1) The level of public tolerance for paying for the cost of cleaner energy in the form of higher energy costs, subsidies, or reduced economic welfare; and
(2) The cost competitiveness of clean energy compared to fossil fuels.
David Roberts at Grist.org argues that the "brutal logic" of climate change demands we trade economic growth in the world's developed nations for a little more climate breathing room. Is voluntary economic contraction a viable climate solution?
It is time to take stock of our current climate trajectory, and consider what it means for climate policy. In Part 1 of this week long series, we argued that our current climate trajectory means we must 1) redouble efforts to reduce CO2 emissions as quickly as possible, and 2) we must proactively build resilience to the uncertain impacts of a changing climate. Part 2 in this series examines whether voluntary economic contraction is a key strategy in reducing emissions “as quickly as possible.”
In a recent commentary, Grist’s David Roberts notes that our current climate trajectory puts us on a path to dangerous climate impacts, demanding that we must reduce emissions dramatically over the near-term. His proposed strategy to reduce emissions as quickly as possible constitutes an “all-hands-on-deck mobilization” (including a carbon tax, efficiency standards, subsidies, tech development). He also argues that the time has come to consider “shared sacrifice” in the world’s wealthiest nations: a course of voluntary economic contraction in developed economies (thus reducing fossil energy consumption), while allowing developing nations time to shift from dirty to clean energy.
As we wrote in Part 1 of this series, we firmly agree that our climate trajectory demands that we redouble efforts to reduce global CO2 emissions as quickly as possible. They key question remains: what levers or strategies are central to determining how quickly we can reduce emissions. Is voluntary economic contraction a key climate strategy?
Recognition is setting in that the current trajectory of global emissions will almosts certainly lead us to a world of dangerous climate impacts. Is this a game changer for our climate policy strategies?
Significantly limiting humanity’s impact on the global climate is quite simply an enormous task. Unfortunately, thanks to budget austerity and federal gridlock, any hope of implementing sweeping U.S. climate/energy policy has been optimistically pushed back to 2013 or beyond (though some incremental improvement is possible). And even the most hopeful observers of the recent global climate negotiations in Durban find little real progress towards reducing emissions. Now more than ever, it is time to take a hard look at where we stand and figure out how to match our policies to our climate goals.
Amongst climate scientists and advocates of climate policy, a growing recognition is taking hold that the current trajectory of global emissions will almost certainly lead us to a world of dangerous climate change impacts. For some, this means coming to terms with the fact that holding total global warming to less than 2°C, a commonly adopted “line in the sand” drawn by many climate advocates, has become nigh-impossible.
As a number of scientific articles have shown, most recently by Kevin Anderson and Alice Bows in the Journal of the Royal Society, limiting the world to 2°C warming most likely requires peaking total global carbon emissions in the next 5-10 years followed by immediate reductions to near-zero by 2050 (see Anderson and Bows emission trajectory options here, via David Roberts, and by David Hone here). It is now fairly obvious that the lack of global progress on decarbonization has likely pushed this timetable out of reach, prompting some recent soul searching amongst many climate advocates (the two of us included).
Is this realization a game changer for climate policy? Yes and no.
The best way to move forward on climate policy is to not focus on climate at all. "Climate Pragmatism" argues that we can move past the climate wars by focusing on what we already agree on: energy innovation, pollution reduction, and resilience to extreme weather.
The best way to move forward on climate policy is to not focus on climate at all.
That's the conclusion of new report by authors from Oxford, London School of Economics, Third Way, the American Enterprise Institute, the Breakthrough Institute and others. Climate Pragmatism argues that we can move past the climate wars by focusing on what we already agree on: energy innovation, pollution reduction, and resilience to extreme weather.
While there is no evidence -- and indeed, great counter-evidence -- that nations can reduce their carbon emissions through caps, there is more than 200 years of evidence of nations moving to cleaner energy, reducing toxic air pollution, and adapting to the climate. These three pillars of climate pragmatism swim with, rather than against, the process of human development and modernization.
The "Climate Pragmatism" paper explodes a myth that's held by many greens: that energy is too cheap. For most of the world, the opposite is true, which is why more than 1.4 billion people lack virtually any access to electricity. That's an astounding figure, but one that rarely gets the attention it deserves. Lack of electricity impacts public health -- try running a modern hospital without any power -- and retards economic growth. If we want developing nations to be better prepared to deal with the effects of climate change -- or just about any other threat -- we need to get them wired.
Where the old climate regime spent 20 years developing a bureaucracy waiting on the two largest emitters -- China and the U.S. -- Climate Pragmatism says that we can get started right away doing more of the things we already agree on and have great experience doing.
Such an approach disappoints climate warriors and partisans. Al Gore, for one, is organizing another day of PowerPoint lectures. But public support for the environment is at more than 30 year-low, cap and trade is dead, perhaps for good, and global warming has become as partisan and polarizing an issue as abortion and gun control.
Climate Pragmatism also comes at a time when national political leaders are moving toward a more pragmatic approach to climate. In the Guardian/Yale360, we argue that Obama's greatest contribution to the environment was moving the Democratic discourse away from global warming apocalypse and toward economic aspiration. Last week, when New York Mayor Bloomberg donated $50 million to anti-coal activism, he pointedly framed his remarks around public health, not climate change.
Climate warriors and skeptics will, to be sure, keep their 20-year feud alive. But they may no longer impede climate progress.
A pragmatic strategy to restart stalled global climate efforts through the pursuit of energy innovation, climate resilience, and no regrets pollution reduction (Report Overview)
Climate Pragmatism, a new policy report released July 26th by the Hartwell group, details an innovative strategy to restart global climate efforts after the collapse of the United Nations Framework Convention on Climate Change (UNFCCC) process. This pragmatic strategy centers on efforts to accelerate energy innovation, build resilience to extreme weather, and pursue no regrets pollution reduction measures -- three efforts that each have their own diverse justifications independent of their benefits for climate mitigation and adaptation. As such, Climate Pragmatism offers a framework for renewed American leadership on climate change that's effectiveness, paradoxically, does not depend on any agreement about climate science or the risks posed by uncontrolled greenhouse gases.
The new report brings the Hartwell framework into an American perspective, and it is authored by a broad group of 14 international scholars and analysts representing a diverse range of political and ideological positions -- from the conservative American Enterprise Institute to moderate Democratic think tank Third Way and the liberal Breakthrough Institute.
Climate Pragmatism is the third paper released by the Hartwell group, an informal international network of scholars and analysts dedicated to innovative strategies that uplift human dignity through mitigation of climate risk, enhancement of disaster resilience, improvement of public health, and the provision of universal energy access. Previous publications include The Hartwell Paper (May 2010) and How to Get Climate Policy Back on Course (July 2009).
Climate Pragmatism also builds on the limited and direct energy technology innovation strategy outlined by the Breakthrough Institute along with scholars at the American Enterprise Institute and Brookings Institution in the October 2010 policy report, Post-Partisan Power.
As the report's authors explain:
The old climate framework failed because it would have imposed substantial costs associated with climate mitigation policies on developed nations today in exchange for climate benefits far off in the future -- benefits whose attributes, magnitude, timing, and distribution are not knowable with certainty. Since they risked slowing economic growth in many emerging economies, efforts to extend the Kyoto-style UNFCCC framework to developing nations predictably deadlocked as well.
The new framework now emerging will succeed to the degree to which it prioritizes agreements that promise near-term economic, geopolitical, and environmental benefits to political economies around the world, while simultaneously reducing climate forcings, developing clean and affordable energy technologies, and improving societal resilience to climate impacts. This new approach recognizes that continually deadlocked international negotiations and failed domestic policy proposals bring no climate benefit at all. It accepts that only sustained effort to build momentum through politically feasible forms of action will lead to accelerated decarbonization.
A large gulf stands between the work of serious energy analysts and a recent essay published by NRDC's analysts, which stubbornly assert that "rebounds at the economy-wide level are trivially small."
Update - 9/2/2011 - Please see corrigendum appended to this post
A recent article in Electricity Policy by Natural Resource Defense Council (NRDC) analysts (David Goldstein et al.) purports to offer a fresh look at the question of energy consumption rebound resulting from cost-effective efficiency improvements. But rather than advancing the ongoing discussion about rebound among serious energy analysts, NRDC attempts to turn back the clock, relying on outdated and recycled citations dating from as far back as the early 1990s and asserting that conclusions about rebound effects must be testable against "rigorously framed hypotheses" while failing to apply that standard to their own claims regarding the historic success of efficiency policies in reducing energy use.
In reviewing their article, it is difficult to escape the feeling that Goldstein and his colleagues simply ignore any recent work that is inconvenient to their premise, including a rich trove of literature and inquiry into rebound effects published in recent years. It is particularly revealing that the authors restrict their analysis to those sectors of the global energy economy where rebound effects appear to be least significant--end-use consumption in rich, developed economies. In so doing they ignore both the productive sectors of the economy responsible for two-thirds of the global energy use and the emerging economies driving the vast bulk of global energy demand growth--in short those sectors of the global energy economy in which the vast majority of current and future energy demand is concentrated and in which the rebound literature suggests rebound effects are likely to be greatest.
In fact, NRDC's contention that "rebounds at the economy-wide level are trivially small" is controverted by virtually everyreviewof the evidence for energy efficiency rebound conducted in recent years. So while NRDC attempts to re-litigate a decades-old debate, for serious analysts and policymakers, particularly in Europe, this debate, about whether rebound exists and is non-trivial, is effectively over. The focus now is on developing a richer understanding of when and where such effects operate, at what scale, and, increasingly, a focus on what, if anything, can be done to mitigate such phenomena. The UK government, for example, now explicitly considers at least one rebound mechanism when planning efficiency policies. And the European Commission funded a large study in 2011 that begins from the consensus that rebound effects are real and significant, and explores what can done about it.
In the United States, the tone seems to be shifting and signs are appearing that energy researchers are beginning to realize they need to deal forthrightly with this issue. Many who before quite adamantly denied the rebound phenomenon now treat it more cautiously as the academic substantiveness of multiple recent studies becomes apparent. Small working groups of scholars are forming to address the gaps in our knowledge. The Center for Climate and Energy Decision Making at Carnegie Mellon University will soon host a gathering of scholars to define the research questions that call out for serious inquiry. And the latest Stanford Energy Modeling Forum study on energy efficiency (EMF, 2011), while it still overlooks much of the recent literature (perhaps because it was framed a few years ago) nonetheless acknowledges key rebound mechanisms.
The critical question really isn't whether or not rebound effects exist -- as basic economic theory dictates, they most certainly do -- but rather how large they may be in various contexts.
Truly cost-effective energy efficiency measures lower the effective price of the services derived from fuel consumption - heating, cooling, transportation, industrial processes, etc. We know that economic actors react in complex ways to changes in the relative and absolute prices of various goods and services, and in particular, that when prices fall, consumers and industry alike demand more of these services, all else being equal. Other indirect and economy-wide effects can result from efficiency improvements as well, as consumers re-spend money saved through efficiency on other energy-consuming goods and services, industrial sectors adjust to changes in the relative prices of final and intermediate goods, and greater energy productivity causes the economy as a whole to grow. Collectively, these various mechanisms are known as "rebound effects" as they drive a rebound in demand for energy services that significantly erodes reductions in total energy use otherwise expected from efficiency improvements, along with much-hoped-for reductions in greenhouse gas emissions. In rough terms, for every two steps forward we may take through efficiency, rebound effects take us one (or more) steps backwards.
Unfortunately, conventional forecasts of energy use and the reductions possible through efficiency measures routinely ignore many (if not all) of the various rebound mechanisms. To the extent rebound phenomena are non-trivial, the implication is that the traditional forecasts of global energy use on which so much of climate change policy is reliant may seriously understate the scale of the challenge by ignoring or improperly treating rebound, meaning we have less time than we think to devise climate solutions.
NRDC's entry into this high-stakes debate disappoints on the methodology side, as we discuss in detail below. But the article also reads like an effort to turn back the clock to a time five to ten years ago when many still dismissed the rebound phenomenon as irrelevant, the province of a few fringe theorists, perhaps. This finds its reflection in the outdated citations the analysts rely on, with the most frequently cited report dating from 2005 (IEA/Geller) and reliant in turn upon Greene (1992), itself a survey of even older literature.
The field has progressed substantially since then--especially in Europe.
Perhaps triggered by the exhaustive UK Energy Research Center study of rebound led by Steve Sorrell (2007, 2009), inquiry into rebound effects has since seen noteworthy advances overseas. Significant funding in Europe is now going to researchers examining the problem through multiple analytic methods, and the fruits of these labors are appearing monthly in the literature.
In a statement that NRDC's analysts clearly did not take to heart, Sorrell concluded his rigorous assessment of the literature in 2007 with this statement:
"It would be wrong to assume that, in the absence of evidence, rebound effects are so small that they can be disregarded. Under some circumstances ... economy-wide rebound effects may exceed 50% and could potentially increase energy consumption in the long-term. In other circumstances ... economy-wide rebound effects are likely to be smaller. But in no circumstances are they likely to be zero."
"Rebound effects are real and significant and combine to drive a total, economy-wide rebound in energy demand with the potential to erode much (and in some cases all) of the reductions in energy consumption expected to arise from below-cost efficiency improvements."
While both literature reviews put the state-of-the-art in the field at NRDC's fingertips, their analysts unfortunately opt to merely cite selectively from both works, while ignoring the broad consensus that has developed in the academic literature.
We suggest the NRDC would be better advised to instead climb on board and move without delay up this learning curve. The bright and committed staff and analysts at NRDC have much to contribute to the understanding - and management - of rebound effects.
But as it stands, there are several methodological difficulties with the current NRDC analysis. Two are central:
First, the NRDC paper hangs on an effort to construct and examine "rigorously-testable hypotheses" of rebound, a method they fail to appropriately utilize, while eventually falling afoul of their own requirement for testability of hypotheses in their effort to prove the historic success of efficiency policies in reducing energy use.
Second, the authors make the common error of focusing their arguments on the smallest part of the energy economy--end-use consumption in rich, developed economies. This means they ignore both the productive sector of the economy responsible for two-thirds of the global energy use and the emerging economies driving the vast bulk of global energy demand growth--and the different-in-kind rebound mechanics in play in both places. In such sectors, the shadow of Jevons still lurks (see Jenkins et al. 2011 for survey of key literature).
Other non-methodological difficulties arise in their portrayal of the positions of rebound analysts, possibly due to a failure to undertake the hard work of examining the rich and burgeoning recent literature. Whatever the cause, it leads them to falsely portray key elements of the debate, and to apparently lay claim to new insights that are in fact old ones.
China is on a roaring path towards single-handedly swamping any hopes of climate stability. The nation's current climate pledges appear lackadaisical rather than ambitious and just as likely to trigger significant rebounds in energy use than real CO2 reductions. The only way to avert potential climate catastrophe is to de-link economic growth from carbon emissions by fueling China -- and the world -- with clean, affordable, and massively scalable energy technologies. Our current menu of technological options is dangerously short, and there's no time to waste: we must make clean energy cheap, and fast.
I've said it before and I'll say it again: when it comes to the global climate challenge, as goes China, so goes the world.
Driving that aphorism home, co2scorecard.org, a not-for-profit project that closely tracks global greenhouse gas emissions, now reports that China's CO2 emissions increased by 906 million tons in 2009 -- the second largest annual increase for any country in recorded history. China's soaring emissions were enough to completely offset the drop in emissions wrought by the economic havoc plaguing much of the Western world (see graphic below).
China's unprecedented surge in CO2
As Goes China, So Goes the World: Soaring CO2 emissions from energy use in China drive global greenhouse gas trends (click image to enlarge; source: co2scorecard.org)
Over the last decade, China's annual emissions of climate destabilizing CO2 jumped by 5 billion tons per year. According to Shakeb Afsah, President and CEO of co2scorecard.org, that's "the highest [increase in annual CO2 output] for a single country in recorded history, representing an average annual emissions increase of almost 12%--more than four times the rate observed [for China] the previous decade."
To put this unprecedented 5 billion ton increase in annual CO2 emissions in context, Mr Afsah and colleague Kendyl Salcito note that during the 14-year long post-war boom period of 1959-1973, during which U.S. CO2 emissions rose each year, America's annual output of CO2 jumped by only 2 billion tons.
This set of frequently asked questions accompanies a new Breakthrough Institute report, "Energy Emergence: Rebound and Backfire as Emergent Phenomena." That report surveys the relevant academic literature and finds extensive evidence that a large amount of the energy savings from below-cost energy efficiency are eroded by demand 'rebound effects.'
On February 17th, Breakthrough Institute released a new, comprehensive survey of the literature and evidence concerning the rebound effects triggered by many energy efficiency improvements.
"Energy Emergence: Rebound and Backfire as Emergent Phenomena" explains why energy efficiency measures that truly 'pay for themselves' will lower the cost of energy services -- heating, transportation, industrial processes, etc. -- driving a rebound in energy demand that can erode a significant portion of the expected energy savings and climate benefits of these measures.
This new set of Frequently Asked Questions explains rebound effects, how they operate, what kinds of energy efficiency improvements trigger bigger or smaller rebounds, and why coming to terms with the full scale of rebound challenges the heart of many contemporary climate mitigation strategies.
A: Increasing the efficiency of an energy consumptive activity will lower the cost of the services derived from that activity - that is, it will change the price of the "energy services" derived from the fuels, such as lighting, transportation goods or services, heating or cooling, industrial processes, etc.
Economic actors respond to price changes in two general ways:
Increasing the utilization of that energy service to increase outputs or incomes. For example, a low-income resident may now heat his or her home more often or heat more areas of the home after weatherizing their home, because it is now far more affordable to heat. (In economics speak, this involves 'elasticities of demand,' or the responsiveness of demand to changes in the price of goods and services)
Re-arranging the factors of production or goods and services consumed to substitute now-cheaper energy services for other goods or services (maintaining the same level of output or income). For example, a more efficient heat plant may enable a chemicals plant or metals smelter to raise temperatures in industrial processes to extract high quality product from poorer quality inputs (substituting energy for materials) or to reduce process times (substituting energy for labor). (In economic terms, this involves 'substitution elasticities,' or the ability of firms or consumers to take advantage of lower prices to productively re-arrange the production inputs or consumer goods they utilize).
Both of these dynamics are "rebound effects," a term for any economic mechanism that leads to a rebound, or increase, in demand for energy following an improvement in energy efficiency that lowers the effective cost of that energy service.
There are other rebound effects as well (for a quick description of each, see the summary here). Our report, "Energy Emergence" surveys more than half a dozen distinct rebound mechanisms, some of which are fairly direct (like the two above), others that are more indirect (like the impact of money saved through efficiency measures as it is re-spent in the economy on other goods or services that in turn require energy to produce). Still more effects are only visible in the aggregate, at the macro-economic scale, as economies respond in a variety of ways to widespread improvements in energy efficiency.
A: No, not always. Although in some cases, it is possible that efficiency improvements will "backfire," driving a rebound in energy that fully compensate for the initial energy savings, increasing energy demand overall. While backfire is by no means the norm, it is possible in some cases (we'll explore conditions that are likely to lead to backfire in a later question).
As "Energy Emergence" concludes, "Rebound effects are real and significant, and combine to drive total economy-wide rebound in energy demand with the potential to erode much (and in some cases all) of the reductions in energy consumption expected to arise from below-cost efficiency improvements."
Think of it this way: rebound effects mean that for every two steps forward we take in energy savings through efficiency, rebound effects take us one (and sometimes more) steps backwards. We may still move forward, but not as much as we initially expected.
A: Rebound matters because the magnitude of rebound effects determines how effective below-cost efficiency improvements are at contributing to lasting reductions in total energy use and therefore greenhouse gas emissions.
Energy efficiency has frequently been cited as the single greatest contributor to emissions reduction and climate mitigation strategies, by everyone from the International Energy Agency and Intergovernmental Panel on Climate Change to consultants like Amory Lovins' Rocky Mountain Institute and McKinsey to efficiency advocates and environmental NGOs. The IEA counts on efficiency for roughly half of the emissions reductions needed in their "Blue Map" climate stabilization scenario (graphic below), for example, while President Obama told reporters in 2009 that with efficiency, "we can save as much as 30 percent of our current energy usage."
So we're counting on energy efficiency to do quite a bit of "climate mitigation work," so to speak.
The problem is that all of these estimates are based on an assumption: that energy efficiency reduces energy demand in a linear, direct, and one-for-one manner. An X% gain in efficiency leads to an equivalent X% reduction in total energy use.
But the economy is anything but direct, linear, and simple, especially when responding to changes in the relative price of goods and services. When a good or service or input to production gets cheaper, consumers and firms use more of it, find new cost-effective uses for it, re-invest any savings in other productive activities, and the economy overall gets more productive overall, driving economic growth and activity.
That's the rebound effect, and it means that we can't assume that improving energy efficiency by 20%, for example, will reduce energy demand by 20%.
If we don't accurately and rigorously account for rebound effects, we risk over-relying on energy efficiency to deliver lasting reductions in energy use and greenhouse gas emissions, and we will fall dangerously short of climate mitigation goals.
A: Rebound effects differ in scale, depending on the type of energy efficiency improvements we're talking about, and where in the economy we look. In very few cases are rebound effects "very small" or insignificant.
Dozens of academic studies have examined the empirical evidence, conducted modeling inquiries, and otherwise tested the scale of rebound effects. While there is much more work to be done to determine the precise scale and impact of rebound effects in different circumstances, the conclusion is that rebound effects are significant and cannot be ignored in energy and climate analysis and policymaking. See the following three questions for summaries of the scale of rebound in different circumstances...
A: In rich, developed nations, if we improve the efficiency of end-use consumer energy services, like cars, home heating and cooling, or appliances, the literature indicates that direct rebound effects alone are typically on the scale of 10-30% of the initial energy savings. Additional indirect and macroeconomic effects may mean total rebound erodes roughly one quarter to one third of expected energy savings in these situations.
Rebound here is smallest in cases when demand for the energy service in question is already saturated (that is, we use as much of it as we would care to use), and highest in cases where the cost of the energy service is a key constraint on fulfilling demand for that service. For example, if a wealthy homeowner already reliably heats all the rooms in his or her house to 70 degrees, he/she wouldn't increase the thermostat to 77 degrees just because our heating system got 10% more efficient. But if a poorer household can't afford to turn the thermostat up, or only heats one room of the house with a small space heater, because the house is too drafty, then if the house gets weatherized and more efficient, that household is likely to use more energy to heat their home. In general, end-use consumer efficiency improvements in rich, developed economies will still lead to a net savings in energy, although rebound effects shouldn't be ignored even here.
A: No, rebound effects are almost certainly larger in poorer, developing nations.
For efficiency in end-use consumer energy services in developing nations, direct rebound effects alone are likely to be much higher than in richer nations, on the order of 40-80%. Rebound is higher here because demand for energy services is far from saturated, demand is far more elastic (responsive to changes in price), and the cost of energy services is often a key constraint on the enjoyment of energy services. This is important, because growing demand in developing nations is the principal driver of energy demand growth worldwide.
We should be very careful in generalizing our experiences or intuitions about rebound effects in rich, developed nations to the larger bulk of the global population living in developing economies. As Lee Schipper and Michael Grubb wrote in 2000:
"[I]n low-income economies, energy and energy costs are often a constraint on economic activity. ... In short, the shadow of Jevons lurks [in developing nations] for precisely the same reason that more efficient use of coal [in Jevons' Britain] did not save coal: the combined effects of different rebounds are very important when energy availability, energy efficiency, and energy costs are a significant constraint to activity and therefore energy use."
Since expanding the supply of energy services is a key constraint on economic activity in developing nations, the macro-economic impact of efficiency improvements in developing economies is also likely to be more significant, helping developing economies grow faster (and thus consume more energy).
A: While more study of rebound effects for efficiency improvements at producing firms (e.g. industry and commerce) is needed, the literature to date indicates that direct rebound effects may be on the order of 20-70% for these sectors, with additional rebound due to indirect and macroeconomic effects.
Rebound effects in firms depend principally on the ability of firms to rearrange their factors of production (labor, capital, energy, and various materials) to better take advantage of now-cheaper energy services. This is especially true for new productive capacity. If long-term substitution is high, rebound effects can be substantial. In addition, output effects contribute to rebound for energy intensive firms with a high elasticity of demand for their products (that is, where consumers are very responsive to changes in the price of their products and demand more product as the price falls).
Improvements in energy productivity at firms can also contribute to greater economic activity and growth, driving up energy demand overall. In general, rebound effects are higher for efficiency in productive sectors of the economy than for end-use consumer efficiency. This is notable, because two-thirds of the energy consumed in the U.S. is consumed in the productive sectors of the economy and "embedded" in the non-energy goods and services purchased by consumers.
A: Yes. At the economy-wide, macro-economic scale, the aggregate impacts of widespread energy efficiency improvements can lead to substantial rebound effects, as producers and consumers respond in turn to various cascading changes in the price of goods and services, the pace of economic growth quickens, and market prices for fuels may fall, driving a further rebound due to market price effects. Since these economic responses are complex and varied, economic modeling is most often used to estimate the scale of macroeconomic rebound due to aggregate efficiency improvements.
A number of 'Computable General Equilibrium' models (see page 34 of the study) generally show rebound at the scale of a national economy of 30-50% or greater, with a surprising number predicting rebound greater than 100% (aka 'backfire'). These studies look at national economies and thus ignore global, macro-economic impacts beyond national boarders, which can add additional rebound in energy consumption.
'Integrative modeling,' a more detailed approach utilized by energy analysts at Cambridge, found that if the world adopted all of the "no regrets" energy efficiency policies suggested by the International Energy Agency, then rebounds effects would erode more than half of expected savings (52%) in the long-term. There are also several reasons to think this is may be a conservative estimate (see pages 39-40 of the study).
At the macro-economic, global scale most relevant to climate change mitigation efforts, then, rebound effects can be substantial, and erode much (if not all) of the expected energy savings and climate benefits.
A: Rebound is likely to be particularly acute and is most likely to trigger backfire (rebound >100% of initially expected energy savings) in the following cases:
If the supply of energy services is a key constraint on economic activity and growth (as it is in much of the developing world), then improvements in energy efficiency are likely to trigger acute rebound or even backfire. In a world where roughly 1.6 billion people lack access to electricity and 2.5 billion rely primarily on primitive biomass (e.g., wood and dung) for cooking and heating, huge pent-up demand for energy services persists and the availability of energy services will be a major determinant of future rates of economic growth and progress. This in turn indicates potential for very large rebounds for efficiency improvements in developing nations.
When more efficient (and thus lower cost) energy services open up new markets or enable widespread new energy-using applications, products, or even entire new industries to emerge. We dub this dynamic a 'frontier effect' in our report, because in these cases, the 'production-possibility frontier' for an energy-using technology expands significantly, opening up unforeseen opportunities for substitution and potentially significant impacts on economic activity and the composition of the economy. In such cases, backfire is the most likely outcome.
Backfire due to this 'frontier effect' dynamic is most likely to arise for 'general-purpose technologies' that have a wide scope for improvement and elaboration, have potential for use in a wide variety of products and processes, and have strong complementarities with existing or potential new technologies. Examples of 'general-purpose technologies' could include steam engines, electric motors, lighting, gas turbines, semiconductors and computing technologies, lasers, robotics, radio transmitters, and perhaps many others. Backfire is most likely to result after energy efficiency improvements in these general-purpose technologies. (See p. 47-8 of the report.)
These emergent 'frontier effect' dynamics may prove particularly challenging for energy analysts to forecast or account for in modeling efforts, as they necessarily involve unforeseen and unpredictable applications of new and improved technologies. This means that forecasts of rebound can easily underestimate eventual rebound due to frontier effects triggered by sustained efficiency gains.
When energy efficiency improvements not only improve the productivity of energy, but also result in simultaneous improvements in other factors of production, such as labor or capital (a 'multi-factor productivity improvement'), an outsized impact on economic output and significant rebound in energy demand can arise.
Very large rebound or backfire is likely the norm in cases of 'win-win' efficiency opportunities, where energy-saving technical changes simultaneously improve the productivity of other factors of production, multiplying the impacts on output, economic growth and energy demand.
For example, in a 2005 paper, efficiency consultant Amory Lovins writes:
"Improved energy efficiency, especially end-use efficiency, often delivers better services. Efficient houses are more comfortable; efficient lighting systems can look better and help you see better; efficiency motors can be more quiet, reliable, and controllable; efficient refrigerators can keep food fresher for longer; efficient cleanrooms can improve the yield, flexibility, throughput, and setup time of microchip fabrication plants; ... retail sales pressure can rise 40% in well-daylit stores ... Such side- benefits can be one or even two orders of magnitude more valuable than the energy directly saved. ...[I]n efficient buildings, ... labor productivity typically rises by about 6-16%. Since office workers in industrialized countries cost ~100x more than office energy, a 1% increase in labor productivity has the same bottom-line effect as eliminating the energy bill - and the actual gain in labor productivity is ~6-16x bigger than that."
While the multi-factor productivity improvements Lovins describes greatly improve the economic case for energy efficiency upgrades, they simultaneously raise the specter of significantly greater rebound in energy demand than if the improvement in energy productivity were considered alone (as is common in the inquiries discussed in prior sections). If the economic impact of labor productivity improvements from efficient buildings is several orders of magnitude greater than the simultaneous savings in energy consumption, for example, then the rebound due to economic growth/output effects alone should also be several orders of magnitude greater than would be predicted if the energy savings were considered alone.
A: Most certainly not! Truly cost-effective energy efficiency improvements make great economic sense and improved energy efficiency may be a key determinant of future economic welfare. In this sense, it may also contribute indirectly to climate mitigation and decarbonization objectives (see "Discussion and Implications" section of our report).
As Skip Laitner of the American Council for an Energy Efficiency Economy writes, "our lagging efforts on efficiency may actually constrain our larger economic productivity."
As we note in our report, this is often the case, particularly in the developing world. Pursuing cost effective energy efficiency opportunities makes great sense then from an economic development and human welfare perspective. At the same time, however, this is precisely why energy efficiency can trigger significant rebound effects that reduce the ability of efficiency to drive down total greenhouse gas emissions, even as efficiency contributes significantly to greater economic growth.
In short, unlocking the full potential of efficiency may mean the difference between a richer, more efficient world, and a poorer, less efficient world. The former is clearly the desirable case, and the one we should all strive for! But in either case, the world will use more or less the same amount of energy. In some parts of the economy, efficiency may reduce overall energy use, while in others it may increase it. The net effect, after accounting for efficiency's role in unlocking economic growth (among other rebound effects) is far from a linear and direct reduction in energy use.
We therefore argue that we should continue to pursue any cost-effective efficiency opportunities on economic grounds, even as we reconsider the degree to which these measures will contribute to climate mitigation efforts.
"In any case, truly cost-effective energy efficiency measures should be vigorously pursued, as they will lead to an improvement in general welfare (at least narrowly construed in economic terms). However, from a climate mitigation perspective, we must be keenly aware of the precise, macroeconomic impacts of energy efficiency improvements, since only a reduction in total aggregate energy consumption will directly contribute to emissions reduction objectives. This in turn requires an understanding and analysis of the non-linear combination of impacts on economic activity, demand for energy as a factor of production, and other macroeconomic factors that are together summed up in the term 'rebound effect.'"
A: Rebound effects are part of the reason that energy use is still growing, even as the economy gets more and more efficient. True, economic growth drives up energy use, even as we get more efficient. But those two terms - economic growth, and energy efficiency - are not unrelated, and rebound effects describe the relationship between the two.
Part of the reason the economy continues to grow is because below-cost energy efficiency improvements grow the supply of energy services and increase the productivity of the economy - we get more economic activity and income and welfare out of the same amount of energy - and productivity improvements are a key driver of economic growth.
Some economists argue that the supply of energy services is a key enabling force in economic growth: think about the impact of electric motors, industrial lasers, computing, automation, and all of the other ways in which we use energy - often quite efficiently - to greatly improve the productivity of our economy. Think about how important energy services - lighting, efficient cooking stoves, electricity - are to development outcomes in the emerging economies of the world. Efficiently expanding the supply of energy services may thus be one of the principal factors determining the rate of economic growth in rich and poor nations alike (see the previous question for more).
That said, there are definitely other factors driving economic growth, including improvements in the productivity of other inputs to the economy, such as labor, capital, and other materials. Rebound effects and energy productivity improvements aren't the only driver of economy growth by any means.
A: Overall, the global economy has been growing at the rate of roughly 3% per year. Historically, we've only seen a roughly 1-1.5% improvement in energy use per unit of economic output (energy intensity or productivity) each year.
For energy efficiency gains to outstrip the increase in energy demand driven by the growing economy, the economy must improve energy intensity/productivity by at least 3% per year, roughly double or triple the historic rate of improvement.
So economic growth continues to out-pace energy efficiency improvements, and energy use continues to grow overall.
Efficiency advocates argue that if we work harder at capturing energy efficiency opportunities, we can more than double or triple this rate of efficiency improvement and bend global energy use downwards.
That's a big task already, but at least two factors make this challenge even harder:
First, a large portion of changes in energy intensity over time can be attributed to structural changes in the economy (Baksi and Green 2007), as economies shift from agricultural to industrial to services-oriented over time. These aren't the technical improvements in transportation, lighting, buildings, or industrial efficiency that energy efficiency policies are concerned with, and these trends are hard to accelerate or effect through policy. They may not continue indefinitely either, so there are limits to gains here.
If, for example, one-half or two-thirds of the historic rate in energy intensity improvements are due to sectoral transitions and structural changes in the economy, then efforts to increase the rate of technical efficiency improvement must work two or three times harder to succeed. Instead of a more than doubling or tripling of our efforts, we must achieve a more than four to nine-fold increase in technical efficiency improvements.
Second, that estimate does not account for rebound effects. Rebound makes the goal even more challenging, as it means efficiency feeds back into energy consumption and economic growth increasing both and making the horizon we're reaching towards recede even further. For every two steps forward we take with below-cost energy efficiency, rebound effects take us roughly one (or more) steps backwards.
For these reasons, we think it is prudent to revisit the ability of below-cost energy efficiency to decouple the economy from growing energy use and drive lasting reductions in climate-destabilizing greenhouse gases. While we should continue to pursue cost-effective energy efficiency measures improvements wherever they may be found, as we write in the report (p. 52):
"Efforts to reliably reduce greenhouse gas emissions or dependence on depleting fossil fuels would be prudent to avoid the risk of overreliance on energy efficiency measures. Such efforts should therefore focus primarily on shifting the means of energy production (rather than end use), relying on zero-carbon and renewable energy sources to diversify and decarbonize the global energy supply system."
A: While the term 'rebound effect' is generally used by energy economists to talk about rebounds after energy efficiency, the basic economic mechanisms - elasticity of demand and substitution, re-spending effects, and the contribution of productivity to economic growth - are well-understood economic phenomena relevant to improvements in the price or productivity of any factor of production, be it capital, materials, or labor.
Let's consider labor, for example. Economists would never assume that a 20% improvement in labor productivity - aka a "labor efficiency" improvement - would reduce overall demand for labor in the economy by 20%.
Everyone knows that improving labor productivity drives economic growth, creates new profitable ways to utilize labor, and overall generally increases employment at the macroeconomic scope, not decreases it.
Even at the scope of the individual factory or assembly line, improving labor productivity may mean the plant can get by with fewer laborers on the shop floor, but even there, the net effects on demand for labor are far from linear and direct. Higher labor productivity lowers product costs and increase demand for those products and opens up new markets that weren't profitable before. It frees up money to re-invest in other areas of production, and it creates new jobs in other areas of business. Even at the firm level, a 20% improvement in labor productivity won't mean 20% of the company's staff is laid off.
Yet this is precisely the simplified, linear assumption that is routinely made in energy and climate forecasting and scenario planning. A 20% improvement in energy efficiency = a direct, 20% net reduction in energy demand, relative to business as usual.
"Rebound effects" are what energy economists call the same, common sense story we just went over for labor, when we're talking about energy productivity or efficiency rather than labor productivity.
The reality is that energy isn't different from labor, or materials, or capital, and a whole field of academic work has gone on - largely out of notice of mainstream energy analysis and policy making - to explore and illustrate how energy efficiency leads to a series of complex, non-linear response throughout the economy that drive a rebound in demand for energy services and thus a rebound in consumption of energy itself. Our "Energy Emergence" report surveys this evidence and presents key implications for climate mitigation efforts.
A: More or less, yes. This basic but somewhat paradoxical dynamic - that energy efficiency lowers the price of energy services, leading to a rebound in consumption of those services - was first thoroughly discussed by British Economist William Stanley Jevons in an 1865 book, The Coal Question. He famously wrote, "It is a confusion of ideas to suppose that the economical use of fuel is equivalent to diminished consumption. The very contrary is the truth."
Some people define this so-called "Jevons Paradox" more strictly, saying that the Paradox refers only to cases when the rebound effects triggered by efficiency measures drives more demand for energy than was originally saved by the efficiency improvements. That's a scenario known in the rebound literature as "backfire," a special kind of severe rebound effect that is greater than 100% of the initially expected energy savings. Backfire means improving energy efficiency actually increases energy demand overall, relative to what it would have been if the efficiency measures hadn't been pursued at all. This is precisely what Jevons observed when he noted that the much more efficient steam engine developed by James Watt led to a huge increase in coal consumption during the 19th century, rather than the conservation of Britain's dwindling coal resources.
However, the generalized dynamic Jevons observed: that efficiency lowers the cost of energy services, driving a rebound in demand for those services, not a direct linear reduction in demand or conservation of fuels, is equivalent to what energy economists now call "rebound effects."
A: No, not all energy efficiency measures trigger rebound effects. Rebound effects are concerned with the response to below-cost efficiency improvements. That's the "low-hanging fruit" we always hear about, the efficiency measures that pay back more in avoided energy use than they cost to install. These are also the ones "below zero" on the often-cited McKinsey and Co. greenhouse gas abatement cost curve seen below. Below-cost efficiency measures always reduce the implicit price of energy services - the useful work provided by energy consumption, be it heating a home, transporting people or goods some distance, powering a production facility, or lighting a work space - and thus always trigger a rebound in demand for those services (see the first question in this series above). It's not a question of whether efficiency measures that truly "pay for themselves" will trigger rebound - they will - the question is how large that rebound will be?
Not all energy efficiency measures are below cost though (the graphic above has arrows pointing to a couple of 'above-cost' efficiency measures, according to McKinsey: plug-in hybrid electric cars, and efficient building design for new buildings). While they incur an economic cost, these efficiency measures should not trigger rebound effects and may still prove effective at reducing energy demand. As we wrote in the report (p. 52):
There is no shortage of opportunities to improve energy efficiency that are not cost-neutral or below-cost. While these measures come with a price tag, in many cases the costs are reasonable and such efforts may be well justified given the long-term threat, economic and otherwise, that global climate change represents.
A: Technically, yes. Price-induced efficiency improvements, whether in response to exogenous energy price increases (changes not caused by policy that is) or successful policy efforts to price carbon emissions or impose energy taxes, should not be expected to result in significant rebound. However, as we write in the report (p. 53), "to fully avoid rebound effects, energy price increases must be sufficient to keep the final price of energy services constant despite improvements in energy efficiency, eliminating any net productivity gains from the efficiency measures." That is, in rough terms, if energy efficiency drives down the price of energy services by 30% or 50%, then energy prices would have to increase through carbon taxes or fees by an equivalent 30% or 50%.
Achievement of deep reductions in energy demand and associated carbon emissions through price induced efficiency will therefore require substantial and rising energy prices over time and sustained over the multi-decadal periods relevant to climate policy, such that rising energy prices keep pace with the improvements in energy productivity.
Furthermore, if revenues collected through carbon pricing, energy taxes, or other efforts to raise energy prices are reinvested into economically productive ends, macroeconomic rebound effects may result, so the precise use of revenues will determine the efficacy of these policies in curbing rebound.
As we conclude in the report:
"Thus, carbon pricing policies (e.g., carbon taxes or cap and trade systems) and energy taxes offer potential tools to mitigate some or all of the energy demand rebound resulting from efficiency improvement - although implementing such policies faces practical challenges and will invariably encounter the political difficulties inherent to policy efforts that seek to impose energy price increases that will result in loss of economic welfare (ignoring potential benefits of avoided economic externalities).
A: Dr. Koomey has done no such thing, as he clarifies in a post at his own blog here. Koomey writes, "It will take time to review the technical questions in the detail this issue deserves, so I'll hold off on stating any conclusions until that work is done."
Joseph Romm of Climate Progress has misrepresented Koomey's work, claiming that "Some of the nation's top energy experts have debunked" our report, linking to a memo from Koomey as his sole evidence. There has been no "debunking" of the the Breakthrough Institute report surveying that literature nor even a serious attempt to debunk it.
A more up to date and unedited compilation of the key emails in that dialog can be read here, if the reader cares to delve deeply into this discussion and see for themselves. Note that the discussion is ongoing.
No. Far from blaming below-cost efficiency for "evils" we praise it as good for economic growth and welfare. However, we do point out that it can increase energy consumption, and that efforts to reduce greenhouse gas emissions cannot rely, as many leading analysts to, on simplistic claims that energy efficiency results in direct energy consumption declines.
Steven Sorrell of the University of Sussex in England headed up a similarly comprehensive review of the evidence for rebound effects published by the UK Energy Research Center in 2007 and originally commissioned by the UK government. In reply to NRDC's David Goldstein and Ralph Cavanagh, he wrote:
"[T]he claim that the Breakthrough Institute "fails to back up its accusations with facts" is plain wrong. Their report is based upon a large volume of empirical evidence in the academic literature. I reviewed this a few years ago - [link] - and the Breakthrough report brings this up to date."
As Mr. Sorrell cautious, "[T]his topic [rebound effects] needs intelligent and careful research to help us understand it better, to improve the quantitative estimates, to reduce the uncertainties and to figure out what we can do in response. Simply dismissing it out of hand," as Goldstein and Cavanagh have tried to do, "will get us nowhere."
Do you have your own questions that aren't answered here? Please leave your question in the comments and we'll do our best to answer.
"Energy Emergence: Rebound and Backfire as Emergent Phenomena" finds extensive evidence and a strong expert consensus that a large amount of the energy savings from below-cost energy efficiency are eroded by demand 'rebound effects,' and that in some cases the rebound exceeds the savings, resulting in increased energy consumption from efficiency, known as backfire. The report contains a comprehensive review of the expert literature.
There is a large expert consensus and strong evidence that below-cost energy efficiency measures drive a rebound in energy consumption that erodes much and in some cases all of the expected energy savings, concludes a new report by the Breakthrough Institute. "Energy Emergence: Rebound and Backfire as Emergent Phenomena" covers over 96 published journal articles and is one of the largest reviews of the peer-reviewed journal literature to date.
In a statement accompanying the report, Breakthrough Institute founders Ted Nordhaus and Michael Shellenberger wrote, "Below-cost energy efficiency is critical for economic growth and should thus be aggressively pursued by governments and firms. However, it should no longer be considered a direct and easy way to reduce energy consumption or greenhouse gas emissions." The lead author of the new report is Jesse Jenkins, Breakthrough's Director of Energy and Climate Policy; Nordhaus and Shellenberger are co-authors.
The findings of the new report are significant because governments have in recent years relied heavily on energy efficiency measures as a means to cut greenhouse gases. "I think we have to have a strong push toward energy efficiency," said President Obama recently. "We know that's the low-hanging fruit, we can save as much as 30 percent of our current energy usage without changing our quality of life." While there is robust evidence for rebound in academic peer-reviewed journals, it has largely been ignored by major analyses, including the widely cited 2009 McKinsey and Co. study on the cost of reducing greenhouse gases.
As Ryan Avent writes: "economics is clearly moving beyond the carbon-tax-alone position on climate change, which is a good thing. If the world is to reduce emissions, it needs technologies that are both green and cheap enough to be attractive to economically-stressed countries and people. And a carbon tax alone may not generate the necessary innovation."
Over at the Economist, Ryan Avent notes that economists are beginning to move beyond a simple reliance on carbon pricing as the sine qua non of climate policy:
The typical baseline economist response to the problem of global warming is a very simple and straightforward one. Climate change is a negative externality, and the carbon emissions that generate it are easily targetable. The clear thing to do, then, is to place a tax on carbon emissions which will lead economic actors to internalise the cost of the warming they create with their decisions. This will discourage carbon-intensive activities and contribute to the development of clean alternative, reducing emissions and climate change.
Easy enough. Unfortunately, this strategy quickly runs into difficulty. One big problem is political. It's very difficult to convince people to accept higher energy costs, and it's very difficult to coordinate policy across countries, which is necessary to ensure that the policy works correctly. But there are also economic challenges. ... Economies are good at finding substitutes for key technologies, but it does take some time. And so because the world has waited so long to act, it now seems that the disaster-avoiding carbon tax path may itself be too economically damaging. So what's an economist to advocate?
On December 15th 2010, hundreds of leading thinkers, scientists, public officials, and innovators gathered in Washington, DC for the Energy Innovation 2010 Conference to initiate a new conversation on a new energy policy paradigm for the 21st century
For 35 years, government and the market have been trying and failing to get energy policy right. Congress has failed to pass large-scale clean energy and climate legislation, while China and other competitors are moving aggressively to take the lead in new energy technology. And the market has failed to create needed low-carbon technology on its own. Meanwhile, the nation's dependence on oil and coal deepens and global temperatures continue to rise. To address these issues, we need to get past the old energy policy paradigm - and we just may be turning the corner.
On December 15th 2010, hundreds of leading thinkers, scientists, public officials, and innovators gathered in Washington, DC for the Energy Innovation 2010 Conference to initiate a new conversation on a new energy policy paradigm: one that recognizes the central role of innovation in resolving the world's looming energy challenges and boosting American competitiveness. Climate change aside, we can't rely on carbon-based fuels for the next 150 years the way we did for the last 150. And we can't create the transformational energy innovations we need without putting innovation front and center.
"Energy Innovation 2010" merely begins a new national energy dialog that must continue well into the coming years. Breakthrough Institute and our partners will continue to spearhead this conversation as we seek new strategies to address the multifaceted energy challenges facing America and the world.
In case you missed the conference, held before a packed house at the National Press Club, or if you simply want to revisit the top notch presentations delivered throughout the packed day, videos from the full conference can be viewed below.
Forcing countries to agree to emissions caps will never work, argue Ted Nordhaus and Michael Shellenberger. The duo argues in a special Wall Street Journal column that the global community should think past U.N. climate talks in Cancun and focus instead on energy innovation, adaptation, and no regrets policies that do not require agreement about global warming.
The failure of the U.N. climate process is proof that shared economic sacrifice cannot be the basis of global action. Nations will not scale up clean energy as long as it remains so much more expensive than fossil fuels. Thinking past talks in Cancun, nations should focus instead on energy innovation, adaptation, and no regrets policies that do not require agreement about global warming. The first step is recognizing that the global market for clean energy exists only thanks to government subsidies and mandates. Instead of imposing emissions controls and subsidizing existing technologies, nations should use competitive deployment to purchase advanced energy technologies, benchmark the winners, and allow intellectual property to spill-over between firms and nations.
This is the framework we propose for pragmatic global climate action in the cover story for a special energy section in today's Wall Street Journal, pegged to the start of U.N. climate talks in Cancun, Mexico. Today also marks the launch of a new web site, Breakthrough Europe, and its kick-off post, "Cancun Can't: The Twilight of European Climate Leadership," which documents the failure of Europe's cap and trade system to reduce emissions.
Our Wall St. Journal essay, "How to Change the Global Energy Conversation," builds on Breakthrough Institute's thinking about the failure of the UN process ("Scrap Kyoto," Democracy Journal), the clean tech intellectual property illusion ("The Revolution Will Not Be Patented," Slate), the green Keynesianism and neoliberalism behind Obama's green jobs fiasco ("Green Jobs for Janitors," The New Republic), and our proposal to make clean energy cheap through technology innovation ("Fast, Clean & Cheap," Harvard Law and Policy Review, Feb 2008).
Gains from a stronger proposed EU emissions target will be swamped by two weeks of emissions growth in China, according to the International Energy Agency.
Were the European Union to call for a deeper cut in carbon dioxide emissions, it would do little to stem the unrelenting increase in global emissions and is unlikely to have any effect on the international climate negotiations, according to the International Energy Agency.
While Europe's negotiating position in international climate talks remains a target of 20 percent emissions reductions below 1990 levels by 2020, some have pushed it to target an additional ten percent reduction. The EU has long maintained that it would boost its target to 30 percent if other industrialized countries followed suit.
"We estimate extending Europe's plan to cut emissions from 20 to 30 percent would roughly equal China's two-week gas output."
Could the 10 percent EU additional emissions cut really equal only two weeks of emissions in China? We checked the numbers on that (h/t Roger Pielke, Jr.), and Mr. Birol is indeed correct.
Support for a technology-first approach to America's energy and climate needs is rapidly growing in the wake of the October 14 release of the "Post-Partisan Power" proposal by scholars at the Brookings Institution, AEI and Breakthrough Institute. Here is a sampling of the many reactions and widespread discussion generated by the report...
Joshua Green, Atlantic Monthly & Boston Globe: "Unlike most of what gets introduced just before an election, this was not a soon-to-be-forgotten political ploy, but a long-term project to accomplish what Congress and the president could not: put the country on the path to a clean energy future."
David Leonhardt, New York Times: [T]he death of cap and trade doesn't have to mean the death of climate policy. The alternative revolves around much more, and much better organized, financing for clean energy research. It's an idea with a growing list of supporters, a list that even includes conservatives -- most of whom opposed cap and trade."
Tim Mak, Frum Forum (a site started by former Bush speechwriter David Frum): "If Americans want to fight the challenges of climate change and reduce their dependence on foreign oil, this piece sets a good baseline for discussion."
Ezra Klein, Washington Post: "It's not that PPP is a sure thing, nor that it will pass Congress anytime soon. The Tea Party Republicans will need to sow their wild and crazy oats for awhile before they feel any need to tack to the center. But when they do, they aren't going to embrace cap and trade. They might, on the other hand, embrace a limited and direct approach to energy innovation."
Michael Levi, Council on Foreign Relations: [T]his idea may well make a lot of sense... most of the paper is actually a smart and thoughtful discussion of how to do energy innovation policy right".
Kirsten Powers, New York Post: " If America wants to remain the leader of the world economy, Washington has to attack this issue."
Bryan Walsh, TIME Magazine: "A truly bipartisan approach on energy and climate won't be easy--sometimes, especially right before an election, it seems completely impossible--but it's the only approach we can hope for, if we still hope."
Nature: "[G]iven the lack of consensus in other areas, long-term R&D intended to bring the cost of clean energy down might well be one area where lawmakers will be able to agree."
Case Western professor Jonathan Adler writes: "While not without flaws, the proposal represents a serious alternative to politically-moribund cap-and-trade proposals and the regulate-everything mindset that produced the Waxman-Markey bill."
Newsweek: "Cap-and-trade is on life support, but its weakness is giving other ideas room to breathe. Emerging proposals focus on investment in clean energy, pitched to the public with a narrative that omits a doomsday point of view about global warming and instead focuses on more practical considerations like job creation or the need to stop certain types of pollution."
All that convergence around a politically centrist, technology-first approach alarmed some climate warriors on left and right.
Climate skeptic Steven Milloy of Green Hell blog (and Junkscience.com) wrote: "The left isn't oscillating at all. They are focused on establishing a one-world socialist paradise. Whatever path gets the comrades there, they'll follow. Global warming has just been there most successful gambit to date."
Said Grist.org's David Roberts: "The Republican Party don't want to spend government money on clean energy, Hayward notwithstanding."
Joe Romm, ClimateProgress.org: [It] should also be obvious we're not going to get a massive federal clean energy program either."
Not all long-time climate warriors were sour on the proposal.
While EDF chief economist Nathaniel Keohane reiterates that "we need both cap and trade and sustained investment in clean energy R&D," he went on to tell the New York Times' David Leonhardt, "if it turns out that we can't get cap and trade in the near term, we need R&D investment all the more."
Harvard's Robert Stavins still insists "there is no other feasible approach that can provide meaningful emissions reductions" beyond cap and trade, but he acknowledges: "New path-breaking technologies will be needed to address climate change, and public support for private-sector or public-sector R&D will be crucial to meet this need."
MIT's Michael Greenstone, a long-time cap and trade supporter, isn't so sure about the real-world viability of the policy he once advocated. "The first best hope was getting a world price for carbon, and that now looks remote in the coming years," he told Leonhardt. "But there are ways in which the other options may be preferable to a price only in the U.S." Greenstone endorses the need for $25 billion in clean energy R&D investments and rightly explains, "All the action is really going to be occurring in developing countries" who will need clean and affordable energy to power their economic growth.
In a second post, Washington Post's Ezra Klein looks the realpolitik in the face as well and concludes: "The best of all worlds would've been a price on carbon married to a big investment in clean-energy research. But this is not the best of all worlds. This is our world. And this [technology-first proposal] ... might be our last, best chance to protect it."
Update The Washington Post editorial page endorses Post-Partisan Power's call for a bipartisan energy innovation strategy, noting: "Even if cap-and-trade had passed, the logic goes, the government would still have had to invest in scientific research to make green energy affordable; might as well make those investments, anyway ... incremental action is better than none."
If you want to focus on a single metric that tells you how fast an economy is decarbonizing (that is, reducing its ratio of carbon dioxide emissions to GDP) then you should focus on changes in the proportion of energy consumption from carbon neutral sources. For any nation to hit emissions reductions targets, and the world to hit low stabilization targets the simple mathematics indicate that annual decarbonization rates will have to exceed 5% in most national economies.
The UK has suffered a second fall in renewable energy production this year, raising concern about the more than £1bn support the industry receives each year from taxpayers.
The drop in electricity generated from wind, hydro and other clean sources in the first half of 2010 could also be a setback to the coalition government's promise that the UK could help lead a "third industrial revolution" and create a low-carbon economy.
The DECC today said lower than expected wind speeds and rainfall led to a 12% fall in renewable electricity generated between April and June, compared to the same period in 2009. This setback follows a smaller but still notable decline between January and March, again compared to last year.
With a sharp drop in output from nuclear power stations as well, greenhouse gas emissions from each unit of electricity generated will inevitably have risen, at a time when the UK has pledged to cut such pollution, and is pressing other countries to do the same.
The renewable energy figures are likely to prompt criticism of the government's energy policies from all sides. Supporters want ministers to increase funding for green industry so more wind farms are built, reducing the risk of seasonal set backs; critics will say the government should instead increase support for energy efficiency, nuclear power or cleaner forms of burning fossil fuels.
The changes in the UK energy mix suggest that the economy has become more carbon intensive as gas has increased at the expense of nuclear power:
The latest energy statistics for the second quarter of 2010 show total energy production in the UK was 9.2% lower than the same period last year, while final energy consumption was 1.8% higher. Among the different fuels, output from oil and coal fell, while only gas increased its output, by 7.1%. It was a similar picture for electricity alone: coal power stayed steady at about 23% of electricity supplied, nuclear output fell by 23% to 15.8%, and gas production rose by more than 10% to over half of all electricity.
Growing empirical evidence that energy efficient technologies may drive greater energy consumption, not less, demands a new look at the role of energy efficiency in efforts to mitigate climate change.
One of the most curious facts about energy is that economies continue to use more of it even as they use it more efficiently. This strikes us as strange because it has become an article of faith that making cars, buildings, and factories more energy efficient is the key to cheaply and quickly reducing energy consumption, and thus pollution.
But energy experts have never seen this as particularly mysterious. As energy historian Vaclav Smil notes, "Historical evidence shows unequivocally that secular advances in energy efficiency have not led to any declines of aggregate energy consumption." A group of economists beginning in the 1980s went further, suggesting that increasing the productivity of energy would increase economic growth and energy consumption. Efficiency advocates dismiss the evidence of rebound in energy use pointing to direct behavioral changes at the household or business level that are easiest to measure. But the most significant energy rebounds are indirect -- in the production of energy, raw materials, and consumer goods -- not in the "end use" of consumer products.
Below, a leading energy economist, Harry Saunders, explains why energy efficiency does not decrease energy consumption in the way we conventionally understand it. In the process, Saunders clarifies the controversy over his recent co-authored study for the Journal of Physics, which reviews 300 years of lighting history to predict the impact of new solid-state lighting technologies (e.g. LEDs). Against the widespread belief that new lighting technology will reduce energy consumption, Saunders and his colleagues found that they will likely increase it -- greatly expanding the global use of lighting in the process, especially in developing countries. Saunders clarifies some important questions, and explains the basics of "the rebound effect."
With the new study, rebound has firmly moved from the theoretical to the empirical, and the implications of it must now be dealt with by all of us who were counting on efficiency to be an easy way to reduce greenhouse gas emissions.
-Michael Shellenberger, President, Breakthrough Institute
Why Energy Efficiency May Not Decrease Energy Consumption
By Harry Saunders
I recently co-authored an article for the Journal of Physics ("Solid-state lighting: an energy-economics perspective" by Jeff Tsao, Harry Saunders, Randy Creighton, Mike Coltrin, Jerry Simmon, August 19, 2010) analyzing the increase in energy consumption that will likely result from new (and more efficient) solid-state lighting (SSL) technologies. The article triggered a round of commentaries and responses that have confused the debate over energy efficiency. What follows is my attempt to clarify the issue, and does not necessarily represent the views of my co-authors.
In another clear sign of the steadily unraveling pollution paradigm, Yvo De Boer, the former head of the UN climate negotiations, has acknowledged that the long debate over targets and timetables for the reduction of carbon dioxide emissions is irrelevant. Asked by Bloomberg about emissions reductions targets in the context of the upcoming climate negotiations in Cancun, De Boer replied:
"Discussions about targets have become largely irrelevant in the context of the Copenhagen outcome. I don't think that we're going to see a dramatic increase in the level of ambition."
De Boer was singing a different tune in the run up to last year's Copenhagen climate negotiations, which ended, predictably, without a comprehensive and legally binding emissions treaty. In August 2009, de Boer told TIME Magazine that even if the U.S. didn't show up to Copenhagen with a new climate change law in hand, an ambitious target would be enough to placate the international community:
"The international community is keenly interested in seeing what steps America is making at home to get its emissions under control, but it also wants to see what the Administration says it will do. If the Administration in Copenhagen commits to a target that is good enough for the international community, that will work. It's up to the U.S. to see how the target will be implemented nationally."
The simple mathematics are that the world needs one nuclear-plant equivalent of carbon-free energy coming on line every day between now and midcentury. The reality is that scaling clean energy sources at that pace is going to require serious technological innovation and sustained commitment to fielding and improving clean energy technologies.
Pacala and Socolow (8) analyzed a scenario that envisioned stabilizing atmospheric concentrations of CO2 at 500 ppm within 50 years. They found that reaching that goal required the deployment of seven existing or nearly existing groups of technologies, such as more fuel-efficient vehicles, to remove seven "wedges" of predicted future emissions (the wedge image coming from the shape created by graphing each increment of avoided future emissions). Those seven wedges, each of which represents 25 gigatons of avoided carbon emissions by 2054, are cited by some as sufficient to "solve" climate change for 50 years (9).
Unfortunately, the original wedges approach greatly underestimates needed reductions. In part, that is because Pacala and Socolow built their scenario on a business as usual (BAU) emissions baseline based on assumptions that do not appear to be coming true. For instance, the scenario assumes that a shift in the mix of fossil fuels will reduce the amount of carbon released per unit of energy. This carbon-to-energy ratio did decline during prior shifts from coal to oil, and then from oil to natural gas. Now, however, the ratio is increasing as natural gas and oil approach peak production, coal production rises, and new coal-fired power plants are built in China, India, and the United States (10).
The enormous challenge of making the transition to carbon-neutral power sources becomes even clearer when emissions-reduction scenarios are based on arguably more realistic baselines, such as the Intergovernmental Panel on Climate Change's "frozen technology" scenario ( 11, 12). Capturing all alternate energy technologies, including those assumed within this BAU scenario, means that a total of ~18 of Pacala and Socolow's wedges would be needed to curb emissions (13) (see the figure). And to keep future warming below 2°C, even under the Davis et al. age-out scenario, an additional 7 wedges of emissions reductions would be needed-- for a total of 25 wedges (see the figure).
The German government is proposing to extend the life of its nuclear power plants and use the resulting windfall to invest in alternatives to fossil fuels. The WSJ reports:
Germany's proposal to keep its nuclear reactors running on average 12 years longer than planned will bring in €30 billion ($38.69 billion) in taxes and levies from utility companies, Economics Minister Rainer Brüderle said Monday.
"It's about €30 billion overall. These are large sums that will be directed to the government, toward renewable energy," Mr. Brüderle said in an interview with radio broadcaster Deutschlandfunk. He added that the revenue includes the contributions utilities will be obliged to make toward renewable-energy research and development, and a tax on nuclear fuel rods. The fuel-rod levy, which utilities fought vigorously to avoid, will generate an estimated €2.3 billion annually but will be limited to six years, Mr. Brüderle said.
Instead of raising the price of fossil fuels, Gates argues that the time has come to shift our attention to raising the revenues necessary to fuel innovation and make clean energy cheap.
In a new interview with Technology Review, Bill Gates nails the global energy and climate challenge and discusses the need for dramatic increases in energy innovation funding to make clean energy cheap.
In a climate discourse dominated by emissions targets and carbon caps, Gates has provided a refreshing and clear-eyed look at the first-order importance of direct public investment to develop clean, affordable technologies to replace fossil fuels on a global scale.
In this new interview, Gates discusses why dismissing the difficulty of the challenge is counter-productive, and argues that carbon pricing can never drive the dramatic innovation required to transform the global energy system. Instead of raising the price of fossil fuels, Gates argues that the time has come to shift our attention to raising the revenues necessary to fuel innovation and make clean energy cheap.
Below the fold, you can find excerpts from Gates' interview, which can be read in full here.
For more, the NYTimesAndy Revkin and TIME magazine's Bryan Walsh each spotlight the interview here and here, respectively.
Last week I suggested that Julia Gillard, Australia's Prime Minister, was asking for trouble by promising that carbon pricing would transform society:
When will politicians learn that climate policies are a political loser if they require that people "transform the way we live and the way we work"? The vast majority of people simply do not want their lives transformed. Promising that government will transform your life is one way to ensure a rough political road for any policy -- climate change, health care, economic, whatever.
Basically, cap-and-trade introduces uncertainty at an individual level (though it does the opposite for actual investors); in the current economic climate, that scares people into thinking that they will lose their jobs. . . Anything that the public is unfamiliar with adds to uncertainty - and that is precisely what people don't want. Second, green jobs may poll well across a wide spectrum of voters, but that doesn't mean that selling regulation or taxation with a jobs message will work.
To succeed, policies focused on decarbonizing the global economy must not be seen as adding to personal insecurities, better yet, they should add to personal security. This should be a major lesson taken from the failure of US climate legislation.
According to a recent IEA report, the U.S. is not alone in facing the possibility of a clean technology R&D funding cliff. The report documents an uptick in global clean energy R&D investment in 2009 as a result of country-level stimulus packages, but the author of the report cautions that investment on this level must be built upon, not allowed to drop off.
According to the [IEA] report, "Global Gaps in Clean Energy RD&D," the recent burst of spending on research as part of various countries' efforts to stimulate their fragile economies has helped provide a substantial boost after decades of diminishing investment on the frontiers of energy inquiry. But the report's author, Thomas Kerr, warned that this was a transitory pulse when sustained growth was needed, particularly given signs that no global price on carbon dioxide emissions was likely any time soon. In essence, the report says, the $24 billion in such spending in 2009 needs to be the new floor for such investments, not a temporary peak.
The report describes how India, despite its poverty, has moved ahead with an initiative for raising money for energy research that the United States -- thanks to a lack of leadership, congressional polarization and fear of anything remotely resembling a tax -- has so far been unable to do: India has created a National Clean Energy Fund for research and innovation financed by a levy of $1.10 (U.S.) per metric ton of mined or imported coal. It's a very modest fee that has created hundreds of millions of dollars to stimulate Indian research and testing of promising technologies.
Click here for more on India's National Clean Energy Fund.
Update (Jul 16, 2010): Expanding on a Washington Post op-ed, Vinod Khosla delineates his argument "about the deficiencies of an isolated cap-and-trade or carbon-pricing bill," and joins the climate technology consensus. Khosla writes, "If we want to make a significant difference, we need to get on the path to reducing carbon worldwide by 80 percent now by focusing on what I call "carbon reduction capacity building" -- in other words, we need to develop radical carbon-reduction technologies. A utility cap (or a carbon price) won't build capacity -- it will just increase our utility costs and decrease our manufacturing competitiveness without any increase in our technological competitiveness. On the other hand, although a policy that promotes capacity building will increase research investments in the short term, it will likely decrease overall electricity costs in the medium to long run (through the magic of competition, technology and regulatory certainty), while simultaneously reducing carbon. Disruptive technologies require investment; they don't come from the status quo."
Update (Jul 14, 2010): Other observers have reached similar conclusions about the faltering pollution paradigm. Walter Russell Mead and Clive Crook weigh in on "The Big Green Lie" but can't agree on what it is. Mead argues that it is "that the green movement is a source of coherent or responsible counsel about what to do" while Crook argues that "it's the diminished credibility of the claim that we have a problem in the first place." But both agree that cap and trade and the effort to establish a global carbon pollution regime are dead. Meanwhile, Newsweek's Stefan Theil observes that "the whole concept of radical, top-down global targets is coming under scrutiny" and suggests that the "new climate realism" will "look at other options beyond the current set of targets" and "include a broader mix of policies" including "a shift of subsidies into research and development" and "greater efforts to adapt society to a warmer climate."
Update (Jul 10, 2010): See Andrew Pendleton and Matthew Lockwood of the UK-based IPPR think tank response to Alex Evans' contention that real action on climate will only occur after a major global warming disaster. "There is simply no reason to believe that a climate shock big enough to bring about major changes in thinking will come along before we reach a tipping point (how would we know?)" they write. "Climate change is by its nature long-term and insidious, more like a frog in a warming pot than a sudden Anschluss."
The twenty-year effort to create a single global pollution framework to reduce carbon emissions is in a state of collapse. Meanwhile, a new climate policy consensus is emerging, one which prioritizes direct investment in technology innovation to make clean energy cheap. The new framework begins from the understanding that the root cause of the failure of the pollution paradigm was the technology and price gap between fossil fuels and their alternatives. But hard and important questions are being asked of the new investment-and-innovation paradigm. How is it different from just increasing subsidies for clean energy? How can we be sure it will reduce emissions? What role should carbon pricing play? Here Breakthrough Institute answers frequently asked questions of the climate technology paradigm and responds to challenges raised by Alex Evans on the left and Robert Michaels on the right, among others, who have taken aim at Breakthrough's and Bill Gates' proposals, respectively.
By Ted Nordhaus and Michael Shellenberger
The twenty-year effort to create a single global pollution framework to reduce carbon emissions is in a state of collapse. Europe's Emissions Trading Scheme (ETS) has not reduced emissions and is quickly fading as the central effort to decarbonize European economies. The UN process is becoming a forum for nations to compare and coordinate national policies and measures, not create or enforce a binding global treaty. And it is now clear that, if energy legislation passes the U.S. Senate, it will not create an economy-wide cap-and-trade system, nor will it increase the deployment of clean energy.
Meanwhile, a new climate policy consensus is emerging, one which prioritizes direct investment in technology innovation. This consensus begins with the recognition that the root cause of the failure of the pollution paradigm was the technology and price gap between fossil fuels and their alternatives. No nation -- not even the wealthiest in Europe -- is willing to price carbon enough to cover the difference. Until the technology gap is closed, little will be done to accelerate the transition to a low-carbon economy.
The "peak oil" theory may be false or misleading, but it does create a powerful motive for change: governments and businesses should make large-scale investments to reduce their exposure to the oil risk.
Many "peak oil" theorists suggest we will reach peak oil production by the year 2020. I argue that this peak is artificial, occurring only due to economic, technological and political limitations. While I contest the "peak oil" theory, I do believe that we can harness the real power of its assertions: governments and businesses should make large-scale investments to reduce their exposure to the oil risk. We can therefore get to the "End of Oil" without adhering to the "Peak Oil" theory. Today we need a new logic - one of environmental protection, energy security, and national prosperity - for ending our addiction to oil.
In 1956, M. King Hubbert produced his famous symmetrical exhaustion curve, forecasting a peak in global oil production. The curve that he constructed is both simple and logical, and appears to work well for the U.S. Yet this seemingly inescapable curve was wrongly fitted to the total, global oil resource. In reality the geological fact that oil, a finite resource, is depleting has thus far been estimated, as Stouteberg (2008) shows, with a wide range of uncertainty.
In a new IEA report intended to inform and guide climate and energy policy decision makers, the Energy Technology Perspective 2010 (Exec. Summary; full report purchase required) demonstrates that the clean technology revolution will require an additional $46 trillion investment (beyond energy infrastructure investment expected in BAU scenarios) if we intend to halve carbon emissions by 2050 (from 2005 levels). And, the IEA adds, a carbon price alone will not be sufficient to drive that level of investment.
It is old news for regular readers of this blog, but today's NYT has a thoughtful article on how China's emissions are surging and efforts to increase efficiency gains are foundering.
Despite the continued economic crisis, global emissions of carbon dioxide, the main greenhouse gas, have remained constant in 2009, as strong increases in CO2 emissions from fast-growing developing countries, such as China and India, have completely nullified CO2 emission reductions in the industrialised world.
As readers here know (and as readers of The Climate Fix will learn), a focus on emissions is only part of what matters, as economic growth is an important driver of emissions growth. The variable that matters most for efforts to achieve targets for the stabilization of carbon dioxide in the atmosphere is the amount of carbon dioxide emitted per unit of economic activity. A reduction in this ratio means that the economy has become more energy efficient and/or is transitioning toward carbon neutral energy generation. In other words, decarbonization is a measure of technological progress in energy use and supply.
So with the 2009 data in hand, how are we doing? Not good.
The graph at the top of this post shows the decarbonization of the global economy 1990 to 2009, with 1990 set to 1.0, using emission data from the NEAA and economic data from Angus Maddison (Note: 2009 GDP is estimated based on growth rate found in the IMF data). I also did the same analysis with economic data from the IMF, reaching the same conclusions. I prefer the Maddison data because it allows cross-country comparisons, and it is also the basis of the analyses in The Climate Fix. The data shows a pronounced slowdown in the rate of decarbonization of the global economy, exactly the opposite effect that climate policies are supposed to be having. This can be seen even more dramatically in the following chart, which shows the annual rate of decarbonization, with a trend line super-imposed in green.
This graph shows that the pace of decarbonization has slowed dramatically in recent decades, with important consequences for climate policies. Tom Wigley, Chris Green and I discussed this emerging trend in Nature in 2008 (PDF). To get a sense of what is needed to achieve low stabilization targets (the exact number does not matter, but say 450 ppm), the world would need to achieve annual rates of decarbonization of more than 5-6% for many decades.
The fact that emissions did not increase from 2008 to 2009 is not good news, nor is it a reflection of the positive effects of climate policies. The one-year stabilization occurred because of the dismal state of the economy in North America and Europe, a condition that policy makers are quickly trying to remedy. When economic growth resumes, so too will growth in emissions in these regions. Meanwhile, the world as a whole took a step backwards in terms of decarbonizing the global economy. The world is falling short in terms of energy technology innovation, with consequences that will reach much further than climate policies alone.
The way we frame society's problems informs how we choose to respond to them. Leigh Ewbank argues that carbon dioxide should not be described as pollution.
RECENTLY, THE AUSTRALIAN Conservation Foundation (ACF) and Australian Council of Trade Unions (ACTU) released Creating Jobs - Cutting Pollution, a new report that investigates how reducing our carbon dioxide output will benefit the Australian economy. Not surprisingly for me, the report finds that our transition to a clean energy economy yields excellent job-creation prospects for Australia. But amid this positive economic forecast is a framing of climate change that has several limitations and implications for policy.
Creating Jobs - Cutting Pollution (pdf) frames climate change as a pollution problem. This frame is consistent with the title of the Rudd government's chief climate change policy, the Carbon Pollution Reduction Scheme, and is a dominant way of communicating the problem of climate change in Australia.
The pollution frame shows how we understand, or in this case misunderstand, the phenomenon. What is meant by pollution in the context of climate change? Does the same language used for sewage overflows, chemical leaks, and oil spills adequately communicate the steps needed to address the challenge?
Michael Levi of the Council on Foreign Relation was hard pressed to find a trend amongst 36 studies projecting the share of renewable energy in 2010. "[T]hat's because there pretty much isn't one." See for yourself in the graph below.
Global climate policy should be radically overhauled in the wake of the failure of the United Nations process, an international group of 14 climate policy experts and scientists argue in the "Hartwell Paper." Instead of the failed Kyoto-Copenhagen focus on national emissions targets and timetables, what's needed is a focus on expanding access to energy for the poor, quickly reducing non-CO2 climate forcings, and adaptation to changing climate.
Global climate policy should be radically overhauled in the wake of the failure of the United Nations process, an international group of 14 climate policy experts and scientists argue in a new paper. The Kyoto-Copenhagen focus on national emissions targets and timetables was bound to fail because it proposed a single over-arching framework to deal with a "wickedly' complex problem. Instead what's needed is a focus on expanding access to energy for the poor, quickly reducing non-CO2 climate forcings, and adaptation to changing climate.
The paper brings together a set of ideas that have been developing over the last decade. The meeting was convened by Gwyn Prins of London School of Ecomomics and Steve Rayner of Oxford University, who wrote "The Wrong Trousers," a 2007 critique of Kyoto. The group included, among others, East Anglia University climate scientist Mike Hulme, author of "Why We Disagree About Climate Change," Ted Nordhaus and Michael Shellenberger of the Breakthrough Institute, the economist Chris Green, co-author of a 2002 Science article calling for advanced energy research to stabilize climate emissions, and University of Colorado's Roger Pielke and Arizona State's Dan Sarewitz, authors of a 2000 Atlantic magazine story arguing climate policy to shift focus to technology innovation and adaptation. Green, Pielke, and Sarewitz are all Breakthrough Senior Fellows.
[UPDATE: FT Energy Source is similarly over the top in their interpretation of the EIA report, writing: "The death of US coal, it seems, is marching on." With more than 45% share of US electricity generation, the death of US coal is hardly "marching on."]
Using data from the EIA and the BEA, the graph above [see graph after the jump] shows that the rate of decarbonization (the change in carbon dioxide emissions to GDP) of the US economy indeed did increase to above 4.5% in 2009, but that is only slightly above rates observed in a number of years in recent decades. To achieve aggressive emissions reductions targets for 2020 and 2050 as proposed in various US policy proposals would require annual rates of decarbonization of 5% or more, sustained over decades.
Cape Wind was a momentous clean energy victory but if climate change advocates truly take the immense scale of the energy and climate challenge seriously, we must ensure that this is the last time that a new zero-carbon energy source faces such prolonged NIMBY opposition.
Al Gore has called on the U.S. to "commit to producing 100% of electricity from renewable energy and truly clean carbon free sources within ten years." But the ten-year hard-fought battle to secure approval for Cape Wind shows that we cannot come close to meeting even a fraction of his goal if we do not appreciate the scale of energy challenge and the incredible pace of clean energy innovation and deployment required to truly reduce carbon emissions and mitigate climate change.
First, let's put Cape Wind in perspective. A $1 billion dollar project, America's first offshore wind farm will consist of 130 turbines that can produce roughly 1.6 billion kWh of electricity annually, enough to power three-quarters of the homes on Nantucket and surrounding islands. But on a national scale, this iconic project will only meet about 0.04% of the total (forecasted) U.S electricity demand in 2010, expected to be about 3,784 billion kWh.
Published by the ABC, Australia's national broadcaster. Cross posted at The Real Ewbank.
By Breakthrough Fellow, Leigh Ewbank
Australia needs a Plan B for climate policy. We need a nation-building project on the scale of the Snowy Mountains Scheme to invest in renewable energy and sustainable infrastructure. This is the fresh approach needed to drive Australia's transition towards a clean economy and protect the nation from dangerous climate change.
The Prime Minister's announcement yesterday that the government will delay its Carbon Pollution Reduction Scheme until 2013 is a tacit admission that pricing carbon is not viable in the current political environment.
Labor and proponents of emissions trading have been living a fantasy for too long. They have ignored the realities of politics to pursue a policy that had no reasonable chance of being implemented at a time when climate change experts agree we must act. Now, Australia is set for yet more inaction.
Two new posts for Earth Day argue that we need to move from nature protection to tech innovation. Ted Nordhaus and Michael Shellenberger are in Slate and Mother Jones arguing that the focus on technology transfer as part of a global climate agreement is a distraction: clean tech IP has already been rapidly transferred to China -- soon it will be transferred back here.
Nuclear power might just be energy's version of the phoenix -- rising from the metaphoric ashes to play a key role in the solution to climate change.
That's the gist of a Wall Street Journal feature that points out that as climate concerns rise a number of environmentalists are rethinking their position on the viability of nuclear power, including Gaia Theorist James Lovelock and Whole Earth Catalogue pioneer, Stewart Brand. Quoting Breakthrough co-founder and Chairman, Ted Nordhaus, WSJ explains why it's becoming increasingly hard for environmentalists to be anti-nuclear power:
"If you're an environmentalist and you're arguing that catastrophic climate change is a serious problem that we have to deal with, it's increasingly hard to say that we're worried about nuclear power because of what's going to happen to nuclear waste buried inside of a mountain for 10,000 years," says Ted Nordhaus, chairman of the Breakthrough Institute, an Oakland, Calif., think tank...
"I'm much more optimistic about these next-generation designs," Mr. Nordhaus says. "If we're going to get serious about a new nuclear strategy, it's going to be with these smaller nuclear designs."
Over at the Energy Tribune, Robert Bryce brings up a long neglected point about electricity use for information technology, inspired by the latest Apple must-have - the iPad:
Like it or not, much of that electricity will be generated by burning coal because that's the cheapest, most available fuel, particularly in developing countries like China, India, South Africa, and others. And as those countries continue their development, a key element of their growth will depend on their uptake of computers, mobile phones, and Internet-based technologies. Thus, to paraphrase Huber and Mills' 1999 article: The iPad is coming. It's time to dig more coal.
Last week I discussed Paul Krugman's views of climate policy (here and here). I argued that he deemphasized the need for technological innovation, which I argue must be at the core of any successful approach to decarbonization of the economy. A few commenters argued rather strenuously that I got things wrong -- Krugman in fact prioritizes technological innovation.
First, power generation has to be "decarbonized": solar, nuclear, wind, geothermal, and maybe some fossil fuels with carbon capture have to replace coal-fired plants. This is within the reach of current technologies.
Yes, you read that right. Krugman says that replacing coal-fired power is within the reach of current technologies. Krugman is absolutely correct in a mathematical sense. We could indeed replace all current coal fired generation in the United States with about 325 new nuclear power plants (1 GW) or about 300,000 new wind turbines (the big ones, 2.5 MW, setting aside minor issues like storage or grid integration). (Data from The Climate Fix) However, Krugman is completely wrong from anything resembling a practical sense.
Last month, Ted and I argued in Yale e360 that there were reasons for decarbonization other than climate change -- many commenters were incredulous. For example: "Although, fwiw, the content of their message is wrong and frankly stupid as well -- what 'bipartisan agreement has grown on the need to decarbonize our energy' exists that is divorced from climate change concerns?"
"America's 250-year supply of coal will be an important source of energy. But even people not much worried about the supposed climate damage done by carbon emissions should see the wisdom--cheaper electricity, less dependence on foreign sources of energy--of Tennessee Sen. Lamar Alexander's campaign to commit the country to building 100 more nuclear power plants in 20 years."
Of all the news and commentary I read about Earth Hour in Australia, not once did I see a mention of the billions of people that now live in energy poverty. Event organizers and commentators failed to discuss the fact that while millions of people around the world symbolically switched off their lights for one hour, billions are desperate to turn their lights on.
"...roughly 1.6 billion people, which is one quarter of the global population, still have no access to electricity and some 2.4 billion people rely on traditional biomass, including wood, agricultural residues and dung, for cooking and heating. More than 99 percent of people without electricity live in developing regions, and four out of five live in rural areas of South Asia and sub-Saharan Africa."
For an event that professes to support climate change solutions, one would think that addressing energy poverty without wrecking our climate would feature prominently in Earth Hour campaigning. So why was energy poverty ignored? And what does this say about the environmental thinking that informed Earth Hour?
Who killed cap and trade? Harvard economist Robert Stavins and the New York Times' John Broder blame a conservative political environment. Breakthrough Senior Fellow Roger Pielke's not having it:
"[Stavins'] argument is wrong in at least two dimensions. First, since the 2008 elections the US has large Democratic majorities in both the House and Senate (including a Senate "supermajority" for much of 2009) and a Democratic President. This fact alone renders Stavins argument flawed. The problem was not a lack of political support, but failed policy design despite the strong political support."
What does big picture, public investment in clean energy look like?
It looks like nine European countries planning to invest up to 30 billion euros (nearly $40 billion) in an underwater North Sea super grid that would harness and integrate Europe's vast renewable resources:
It would connect turbines off the wind-lashed north coast of Scotland with Germany's vast arrays of solar panels, and join the power of waves crashing on to the Belgian and Danish coasts with the hydro-electric dams nestled in Norway's fjords: Europe's first electricity grid dedicated to renewable power will become a political reality this month, as nine countries formally draw up plans to link their clean energy projects around the North Sea...
...All those involved also have an eye on the future, said [EWEA's Justin] Wilkes. "The North Sea grid would be the backbone of the future European electricity supergrid," he said. This supergrid, which has support from scientists at the commission's Institute for Energy (IE), and political backing from both the French president, Nicolas Sarkozy, and Gordon Brown, would link huge solar farms in southern Europe - producing electricity either through photovoltaic cells, or by concentrating the sun's heat to boil water and drive turbines - with marine, geothermal and wind projects elsewhere on the continent. Scientists at the IE have estimated it would require the capture of just 0.3% of the light falling on the Sahara and the deserts of the Middle East to meet all Europe's energy needs."
Breakthrough President Michael Shellenberger is quoted in today's Wall Street Journal on the problem facing many governments today, of how to spark and continue along the path towards a clean energy economy. The reality, Shellenberger says, is that you'll never induce the birth of a new energy economy by taxing the old into obsolescence:
Breakthrough President Michael Shellenberger is quoted in today's Wall Street Journal on the problem facing many governments today, of how to spark and continue along the path towards a clean energy economy. The reality, Shellenberger says, is that you'll never induce the birth of a new energy economy by taxing the old into obsolescence:
"I think the reality is that we are not going to get beyond a fossil-fuel economy, and I don't think we are going to impose big costs on the fossil-fuel economy either in the U.S. or in foreign developing countries like China, until the alternatives become a lot cheaper. I think while it is conceivable to have a carbon tax in the U.S., it will never be high enough to make fossil fuels as expensive as clean energy technologies are today."
Nordhaus in the Albuquerque Journal
John Fleck, of the Albuquerque Journal, profiled Breakthrough Institute Chairmen Ted Nordhaus in a column entitled, "A Third View on Climate Change." He describes Nordhaus as "the liberal environmentalist that some liberal environmentalists love to hate," alluding to the criticism Nordhaus, along with Breakthrough President Michael Shellenberger, leveled on the efficacy of the environmental movement first in their landmark essay, "The Death of Environmentalism," and then in their book, "Break Through: From the Death of Environmentalism to the Politics of Possibility."
Fleck writes:
But he [Nordhaus] thinks the core strategy offered by conventional environmentalism -- emissions caps, putting a higher price on carbon-based energy like coal and gasoline to raise the cost of its use and spur a switch to alternatives -- is a failed approach and a distraction from the actions needed to deal with the problem.
The notion that governments will voluntarily jack up energy prices today to benefit future generations seems like a nonstarter to Nordhaus. The fact that the public, faced with government imposition of rising energy costs, will suddenly find reasons to question the underlying science of climate change is exactly what the 44-year-old pollster and political activist says we should expect...
Discourse over climate change and energy in this country has devolved into a ritualized political argument unmoored from the underlying issues, Nordhaus argues.
Greens, he said, think they are battling anti-science Neanderthals and fossil fuel-funded climate change skeptics. Skeptics, he said, think they are fighting a hoax being perpetrated in the name of black helicopter-driven government control.
It is identity politics. "They're really fighting over their identities," he said. "They're not fighting about actually doing anything."
The pair, as Fleck notes, have sought to override that debate by advocating a solution to climate change that has proven to be publicly popular:
Chief among their ideas is that the best way to deal with climate change is government investment in clean energy technology. While polls show waning public support in the United States for action on climate change, Nordhaus noted that clean energy remains tremendously popular.
The key, he said, is to make clean energy economically viable, so there is no need to negotiate the political minefield associated with using taxes or caps to raise the cost of dirty energy. "We're not really going to tackle any of these issues until this stuff is cheaper than coal," Nordhaus said."
Learn More
Shellenberger and Nordhaus have made this case in a number of publications. "The End of Magical Climate Thinking", which originally appeared in the journal Foreign Policy, explores the demise of the (perhaps slightly misappropriated) hope that many progressives vested in the figure of Barack Obama's coming to the White House, the belief that the transition to a new carbon economy, and thereby a new era, was already underway and its arrival was all but guaranteed to be swift and painless.
Also check out the formative white-paper: "Fast, Clean & Cheap: Cutting Global Warming's Gordian Knot, first published in Harvard Law & Policy Review (Jan 2008), which explores the idea that societies will never rid themselves of incumbent energy sources so long as the alternatives are less reliable and more expensive.
The clean tech sector has been booming in recent years, but can that rate of rapid growth sustain itself? In their most recent critical analysis, given as a keynote speech at the Cleantech Group's Feb 2010 Conference in San Francisco, Shellenberger and Nordhaus argue that it cannot. "Storm Clouds on the Clean Tech Horizon?" continues to press the point that subsidies will not solve the crisis alone. For clean tech to really take off and gain a majority of the market share, radical innovation is the key.
This post collects the articles surrounding Bill Gates recent push for an innovation focused R&D agenda that aims to bring down the carbon intensity of energy production to zero CO2 within the next fifty years:
Gates: Efficiency Won't Cut It:Innovation, says Bill Gates, "not insulation," is the way for the United States to transform its energy sector and achieve its "80% by 2050" goal.
Bingaman and Gates Back Chu on Energy R&D:Energy Secretary Steven Chu is ready to stand up for R&D - and he's not alone - Sen. Jeff Bingaman and famous billionaire, Bill Gates, are joining Chu in his fight to make investment in clean energy R&D a policy priority.
Innovating to Zero: Gates Wants Clean, Cheap Energy Fast:Despite the philanthropic focus of his foundation, Bill Gates confided to a rapt audience at the TED conference last week that if he could have one wish granted he wouldn't ask for "vaccines or seeds," he'd ask for clean, cheap energy, and fast.
To Make Poverty History, Make Clean Energy Cheap:Bill Gates understands the challenge of poverty alleviation, which is why he's identified the most critical global imperative to make poverty history: making clean energy cheap.
Clean tech has been booming, with 25, 30, even 40 percent growth in recent years. Can it last? It cannot. A new Breakthrough analysis and PowerPoint presentation shows storm clouds on the horizon. More subsidies for solar and wind won't do the trick. Radical innovation is the key. The goal? Radical cost reductions so clean energy is as cheap -- or cheaper than -- coal.
The double digit growth of clean tech industries like solar and wind can't last, and climate legislation in Congress won't continue the momentum, according to a new Breakthrough Institute analysis made for a keynote speech at the Cleantech Group's February 2010 conference in San Francisco.
The rapid growth of renewable energy over the last few years will be difficult to maintain politically as solar and wind achieve a larger share of the energy market. If the U.S. were to maintain its production tax credit (PTC) subsidy for wind power to become 20 percent of America's energy generation, the cost would be $20 billion per year. Moreover, existing transmission is rapidly meeting capacity, which will push wind and solar into sites with higher load management, storage, and transmission costs.
Climate legislation currently being considered in Congress would do little to help the clean tech industry. Cap and trade legislation that passed the House would provide a .8 - 1.5 cent/kwh subsidy to renewables in contrast to the current 2.1 cent/kwh subsidy from the PTC, the 2 - 4 cents/kwh subsidy the Chinese government provides to wind, the 36 - 51 cents/kwh the Germans provide to solar, and the 11 - 17 cents/kwh the Chinese provide to solar.
Despite the philanthropic focus of his foundation, Bill Gates confided to a rapt audience at the TED conference last week that if he could have one wish granted he wouldn't ask for "vaccines or seeds," he'd ask for clean, cheap energy, and fast.
Bill Gates wants clean, cheap energy more than he wants to pick the next 50 years worth of presidents, even more than he wants a miracle vaccine. At least that's how he ranked his number one wish while describing climate change as the world's greatest challenge to a rapt audience at the TED conference last week.
Just weeks after lending his voice to a growing "innovation consensus" by writing on his blog, Gates Notes, that innovation, not just insulation, must be the focus if we are serious about "getting to zero," Gates' TED speech expanded on what we need to get there:
"We need energy miracles. The microprocessor and internet are miracles. This is a case where we have to drive and get the miracle in a short timeline."
Gates emphasized the need for an energy miracle portfolio that includes carbon capture and storage and nuclear as well as wind and solar. According to CNN's coverage of the conference (the video is not posted yet), Gates showed particular interest in the potential for nuclear waste reprocessing as a source of clean, cheap energy.
Making clean energy cheaper than coal through investments in game-changing innovation is the critical path to a low-carbon energy future, according to Bill Weihl, Google's "Green Energy Czar" and a Breakthrough Institute Senior Fellow. In today's New York Times Green Inc blog, Weihl answers a few questions about what it's like to be on the frontlines of the push for clean energy.
As a consumer of large quantities of energy -- used to run its ever growing data centers -- Google has a personal stake in the business of energy politics. It also has vast sums of revenue from its sponsored ad business, and the kind of creative culture that urges its engineers to think beyond the short-term, profit-centric model that too-often paralyzes large corporations.
Q: Google is obviously best-known as an Internet company. Why is Google involved with alternative energy in the first place?
A: I'd say there are two reasons. One is that we use a moderate amount of energy ourselves: we have a lot of servers, and we have 22,000 employees around the world with office buildings that consume a lot of energy. So we use energy and we care about the cost of that, we care about the environmental impact of it, and we care about the reliability of it. The other reason is that, starting with the founders and filtering down to many of our employees, people care about environmental issues.
Forget 80% by 2050 and 450ppm. Stop fixating on emissions reduction targets and timetables. As UN climate negotiations begin today in Copenhagen, there is only one number that deserves the world's attention: $10.5 trillion. That is the scale of shared investment that the International Energy Agency says is necessary over the next two decades to bring about a clean energy revolution and enable the global community to meet its climate goals. For years, climate activists and government leaders have continued to obsess about emissions reduction targets, while paying short shrift to the critical clean technology investments that we will need to get us there. If Copenhagen doesn't get us closer to closing the massive clean technology investment gap, it will have failed the global community.
Forget 80% by 2050 and 450ppm. Stop fixating on emissions reduction targets and timetables. As UN climate talks kick off in Copenhagen, Denmark, if you want a number to focus the world's attention on, try this one: $10.5 trillion.
That's the scale of additional investment required between now and 2030 to put the world's energy system on a lower-carbon path, according to the world energy watchdog, the International Energy Agency.
Without measurable progress that dramatically increases global investments in clean energy, we can forget stabilizing global temperatures or atmospheric carbon dioxide at any level. And as the IEA makes clear, the world's governments must lead the way in making massive public investments to rapidly develop and deploy an array of clean energy technologies capable of sustainably and affordably powering the planet.
So for those following the progress in Copenhagen, keep that sense of scale -- $10.5 trillion -- and just one phrase on your mind: Show me the money!
Enough With the Targets and Timetables
In the days leading up to the UN climate summit beginning today in Copenhagen, the focus has been on pronouncements from world leaders establishing various national targets to reduce or curb the growth of the carbon dioxide emissions principally driving global warming.
In July of this year, the world's 17 largest economies declared support for "an aspirational global goal" to reduce emissions by 50% by 2050. Then, the world watched in recent weeks as first the United States, then China and most recently Brazil and India put their emissions pledges on the table. Each would cut their emissions some amount by some date, with the developed countries outlining targets for absolute cuts to CO2 emissions and most developing countries, including China and India, announcing reductions in the carbon intensity of their economies (aka CO2 per GDP).
To decarbonise the nation and achieve the 80% reduction in GHG output by 2050, the UK will need to undertake a monumental task at a scale it has never seen before, reducing carbon output per unit of GDP by over 5% annually until 2050. Between 2001 and 2006, we achieved an average of 1.3% annual reduction, but in more recent years, progress has been far more limited. Globally, while the UK, is one of the better performing nations. France has the most decarbonised economy among the large developed nations - through its move towards nuclear power as the predominant source of electricity generation.
For the UK to be on track to achieve the emission reductions required by the Climate Change Act, it would have to become as carbon efficient as France by about 2015; which magnitudinous challenge would require the equivalent of the UK constructing and putting into service about 30 new nuclear power stations in the next five years, while retiring an equal amount of coal-fired generation!
"The Institute of Mechanical Engineer's can't do, won't do attitude is sending out a defeatist message ahead of the crucial climate change talks in Copenhagen. The truth is that if we act now we can not only beat climate change but gain from the green benefits that will flow in terms of jobs and investment from going low carbon."
If some of the numbers in the report sound familiar, it is because it relies a good deal on my analysis of UK climate policy:
The UK Committee on Climate Change has issued it first progress report (here in PDF), and here is the bottom line:
Emissions reductions in recent years have been very modest. Going forward, a step change is required if carbon budgets are to be achieved.
The report also acknowledges indirectly that looking only at emissions is misleading, because it is easy to see the recent economic slump as being some sort of success in emissions reductions, however, sometimes a slump is just a slump:
Where CO2 emissions have fallen, the extent to which this has been through implementation of measures to improve energy or carbon efficiency is very limited.
In other words, nothing has really happened in the UK economy yet to accelerate decarbonization the UK economy. My analysis of the policy implications of the emissions reduction targets of the UK Climate Change Act and its implications for the rate of decarbonization of the UK economy can be found in this paper.
