Monday, November 9, 2009
Why Copenhagen Matters
Some are ready to declare Copenhagen dead along with any kind of agreement that depends on long-term commitments by sovereign states. Our chances are better to act unilaterally with international collaboration wherever possible. But I think it is a mistake to see the choice as between successful binding agreements by nation states and unilateralism. What the Copenhagen process offers (and after all it does not need to be concluded this year to be a success), is a context in which parties can create incentives to encourage commitments being taken seriously in the context of a global economic system in which many sticks and carrots exist. The value of Copenhagen is threefold – it creates a framework that can be adjusted if and when our projections of what needs to be done prove to have been too optimistic. It also creates a standard which sets expectation for all parties unlike Kyoto. Finally, it offers a context in which unilateral action by nation states diminishes the risks of others worrying that they will lose out economically if they too act alone.
Monday, November 2, 2009
Behavior and Energy Conservation
An edited version of a memo I recently wrote to someone in the Obama administration:
In the next 20 years we face limited options in reducing our energy use by significantly transforming energy output. Even with the knowledge we have in hand today, significantly reducing the percentage of coal and natural gas will take many decades especially in the light of the projected rise in energy demand. Meanwhile, carbon capture and sequestration has no chance of reaching significant deployment in the near term. As such, in the near term promoting energy efficiency and conservation is not just our best hope but one of our few hopes! That said, how important is the role of the individual citizen in such an effort?
Here I will argue that while changing individual behavior is of value; it is going to be an uphill battle and there are things we can learn from other fields before proceeding. What is more important I will argue, is to change individual attitudes toward the need for collective action of us all as a nation.
The Limits on Behavioral Change: When it comes to energy conservation and efficiency, individual behavior falls into two groups – one off actions, like buying a more efficient appliance and repeated actions, like turning off lights. In both areas, findings of psychology and behavioral economics highlight the significant challenge to promoting such change: i. Significant inelasticity of demand for energy means that price driven change requires large rises in markets that are regulated “for the public good” and subject to political constraints. ii. Even where price begets change at the outset, inurnment to the change overtime combines with habit to reassert old behavior. iii. The overvaluation of money in hand today over savings in the future, forces subsidies to promote energy efficiency upgrades that are extremely costly when done at scale. These are not “killer” objections, but they imply the need to proceed with great care in understanding the range and persistence of conservation efforts that rely in the individual actor acting in isolation.
Alternatives: The problems just alluded to arise from the role of the individual choice in the causal chain that aims to increase efficiency and conservation. But three alternatives sidestep these problems: i. The imposition of universal “upstream” appliance standards. (The most salient success of which has been in the area of home refrigerators.) ii. Exploiting the design environment to bring about changes in behavior subconsciously. (For example, the mere placement of a light switch.) iii. Using elements of smart grids and information networks that can communicate directly with and control (thermostats, appliances etc) in the home environment. But such alternatives, if widely implemented still implicate the individual citizen since they will be hard to defend without citizen acquiescence. Now instead of asking consumer to choose efficient appliances over (upfront) cheaper inefficient ones, we are asking them to acquiesce to their government banning sale of the latter. And instead of asking consumers to turn down air conditioners during peak demand, we might be asking them to cede control to their utility provider.
The Upshot: Winning such acquiescence involves a renegotiation of the social contract. It involves winning citizen support for policies that (in effect) will limit choices that may be preferred in the short run. This is more than “nudging” (a la Sunstein). This is not easy to do. But it is not without precedent. Anti-smoking efforts, seat belt campaigns and above all, social security all involved not just a nudge but the creation of national consensus about the need for us to invite regulation for our own good. The development of an effective climate policy is not simply a technical challenge of science but also a challenge of how to involve the citizens with a sense of ownership over the choices we face.
Recommendations: in the light of these considerations , I would urge:
1. Careful examination of the effectiveness of individual behavioral change programs.
2. Greater use of upstream appliance standards.
3. Use of the design environment to produce energy efficiency and conservation.
4. Mechanisms that directly control the home environment without consumer actions.
5. But above all, an examination of the broader issue of how one can win support of evolving national policy.
In the next 20 years we face limited options in reducing our energy use by significantly transforming energy output. Even with the knowledge we have in hand today, significantly reducing the percentage of coal and natural gas will take many decades especially in the light of the projected rise in energy demand. Meanwhile, carbon capture and sequestration has no chance of reaching significant deployment in the near term. As such, in the near term promoting energy efficiency and conservation is not just our best hope but one of our few hopes! That said, how important is the role of the individual citizen in such an effort?
Here I will argue that while changing individual behavior is of value; it is going to be an uphill battle and there are things we can learn from other fields before proceeding. What is more important I will argue, is to change individual attitudes toward the need for collective action of us all as a nation.
The Limits on Behavioral Change: When it comes to energy conservation and efficiency, individual behavior falls into two groups – one off actions, like buying a more efficient appliance and repeated actions, like turning off lights. In both areas, findings of psychology and behavioral economics highlight the significant challenge to promoting such change: i. Significant inelasticity of demand for energy means that price driven change requires large rises in markets that are regulated “for the public good” and subject to political constraints. ii. Even where price begets change at the outset, inurnment to the change overtime combines with habit to reassert old behavior. iii. The overvaluation of money in hand today over savings in the future, forces subsidies to promote energy efficiency upgrades that are extremely costly when done at scale. These are not “killer” objections, but they imply the need to proceed with great care in understanding the range and persistence of conservation efforts that rely in the individual actor acting in isolation.
Alternatives: The problems just alluded to arise from the role of the individual choice in the causal chain that aims to increase efficiency and conservation. But three alternatives sidestep these problems: i. The imposition of universal “upstream” appliance standards. (The most salient success of which has been in the area of home refrigerators.) ii. Exploiting the design environment to bring about changes in behavior subconsciously. (For example, the mere placement of a light switch.) iii. Using elements of smart grids and information networks that can communicate directly with and control (thermostats, appliances etc) in the home environment. But such alternatives, if widely implemented still implicate the individual citizen since they will be hard to defend without citizen acquiescence. Now instead of asking consumer to choose efficient appliances over (upfront) cheaper inefficient ones, we are asking them to acquiesce to their government banning sale of the latter. And instead of asking consumers to turn down air conditioners during peak demand, we might be asking them to cede control to their utility provider.
The Upshot: Winning such acquiescence involves a renegotiation of the social contract. It involves winning citizen support for policies that (in effect) will limit choices that may be preferred in the short run. This is more than “nudging” (a la Sunstein). This is not easy to do. But it is not without precedent. Anti-smoking efforts, seat belt campaigns and above all, social security all involved not just a nudge but the creation of national consensus about the need for us to invite regulation for our own good. The development of an effective climate policy is not simply a technical challenge of science but also a challenge of how to involve the citizens with a sense of ownership over the choices we face.
Recommendations: in the light of these considerations , I would urge:
1. Careful examination of the effectiveness of individual behavioral change programs.
2. Greater use of upstream appliance standards.
3. Use of the design environment to produce energy efficiency and conservation.
4. Mechanisms that directly control the home environment without consumer actions.
5. But above all, an examination of the broader issue of how one can win support of evolving national policy.
Monday, October 26, 2009
EPA Scenarios
In a report, EPA provides a stark contrast between business as usual, G8 only action and world-wide aciton. The data confirm the stark reality about the prospective role of the Developing World. What follows is (edited) from the report ( Economic Impacts of S.1733: The Clean Energy Jobs and American Power Act of 2009,October 23, 2009):
In previous analyses, EPA has looked at the impact of U.S. policy combined with the policies assumed for developed and developing countries on global greenhouse gas
concentrations. However, the assumptions used in earlier analyses for what policies other countries would adopt are not consistent with the recent G8/Major Economies Forum goal discussed above. EPA has now analyzed, using the MiniCAM and MAGICC models, how U.S. targets consistent with the President’s FY 2010 budget proposal (14% below 2005 in 2020, and 83% below 2005 in 2050)22 combined with international action consistent with the G8 agreement could affect global CO2e concentrations and temperatures.
EPA presents data on global CO2e concentrations through 2100 assuming a climate sensitivity (CS) of 3.0. with three scenarios. (The CS is the equilibrium temperature response to a doubling of CO2, and a CS of 3.0is deemed the “best estimate” by the IPCC.):
(1) Reference: no climate polices or measures adopted by any countries.
(2) G8 -International Assumptions: consistent with G8 agreement to reduce global emissions to 50% below 2005 levels by 2050. U.S. and other developed countries reduce emissions to 83% below 2005 levels by 2050, and developing countries cap emissions beginning in 2025, and return emissions to 26% below 2005 levels by 2050. All countries hold emissions targets constant after 2050.
(3) Developing Countries After 2050: US and developed countries same as G8 scenario. Developing countries adopt policy in 2050 holding emissions constant at 2050 levels.
In the reference scenario, CO2e concentrations in 2100 would rise to approximately 936 ppm.25 If the U.S. and other developing countries took action to reduce emissions to 83% below 2005 levels by 2050, and developing countries took no action until 2050, then CO2e concentrations in 2100 would rise to approximately 647 ppm. If the G8 goals are met, then CO2e concentrations would rise to approximately 485 ppm in 2100. It should be noted that CO2e concentrations are not stabilized in these scenarios. To prevent concentrations from continuing to rise after 2100, post-2100 GHG emissions would need to be further reduced. For example, stabilization of CO2e concentrations at 485 ppm would require net CO2e emissions to go to zero in the very long run after 2100.
Given the CO2e concentrations for the various scenarios, we can also calculate the observed change in global mean temperature (from pre-industrial time) in 2100 under different climate sensitivities. Assuming the G8 goals (reducing global emissions to 50% below 2005 by 2050) are met, warming in 2100 would be limited to no more than 2 degree Celsius (3.6 degrees Fahrenheit) above pre-industrial levels under a climate sensitivity of 3.0 or lower.
It should be noted that the temperature change in 2100 in this scenario is not stabilized, so the observed change in global mean temperature in 2100 is not equal to the equilibrium change in global mean temperature. There are two reasons for this. First, while the G8 international goals stabilize global GHG emissions at 50% below 2005 levels, CO2e concentrations and temperature are not stabilized. Determining an equilibrium temperature under any scenario requires additional assumptions about post¬2100 emissions. If emissions remain constant post-2100, CO2e concentrations will continue to rise. Equilibrium temperature would only be achieved after CO2e concentrations are in equilibrium. Second, the inertia in ocean temperatures causes the equilibrium global mean surface temperature change to lag behind the observed global mean surface temperature change by as much as 500 years. Even if CO2e concentrations in 2100 were stabilized, observed temperatures would continue to rise for centuries before the equilibrium were reached.
Continued GHG emissions reductions after 2100 could stabilize CO2e concentrations at the 485 ppm levels achieved in 2100 in the G8 scenario. In order to achieve an equilibrium temperature change of 2 degrees (assuming CS = 3.0), CO2e concentrations must be stabilized below 485 ppm, requiring continued abatement beyond the level needed to stabilize concentrations at 2100 levels. It would be possible to reduce CO2e concentrations after 2100 below 485 ppm by even further reducing GHG emissions in the next century. An ‘overshoot’ scenario such as this would further reduce the equilibrium temperature change, making it possible to achieve the 2 degrees C target even with a climate sensitivity of 3.0.
In previous analyses, EPA has looked at the impact of U.S. policy combined with the policies assumed for developed and developing countries on global greenhouse gas
concentrations. However, the assumptions used in earlier analyses for what policies other countries would adopt are not consistent with the recent G8/Major Economies Forum goal discussed above. EPA has now analyzed, using the MiniCAM and MAGICC models, how U.S. targets consistent with the President’s FY 2010 budget proposal (14% below 2005 in 2020, and 83% below 2005 in 2050)22 combined with international action consistent with the G8 agreement could affect global CO2e concentrations and temperatures.
EPA presents data on global CO2e concentrations through 2100 assuming a climate sensitivity (CS) of 3.0. with three scenarios. (The CS is the equilibrium temperature response to a doubling of CO2, and a CS of 3.0is deemed the “best estimate” by the IPCC.):
(1) Reference: no climate polices or measures adopted by any countries.
(2) G8 -International Assumptions: consistent with G8 agreement to reduce global emissions to 50% below 2005 levels by 2050. U.S. and other developed countries reduce emissions to 83% below 2005 levels by 2050, and developing countries cap emissions beginning in 2025, and return emissions to 26% below 2005 levels by 2050. All countries hold emissions targets constant after 2050.
(3) Developing Countries After 2050: US and developed countries same as G8 scenario. Developing countries adopt policy in 2050 holding emissions constant at 2050 levels.
In the reference scenario, CO2e concentrations in 2100 would rise to approximately 936 ppm.25 If the U.S. and other developing countries took action to reduce emissions to 83% below 2005 levels by 2050, and developing countries took no action until 2050, then CO2e concentrations in 2100 would rise to approximately 647 ppm. If the G8 goals are met, then CO2e concentrations would rise to approximately 485 ppm in 2100. It should be noted that CO2e concentrations are not stabilized in these scenarios. To prevent concentrations from continuing to rise after 2100, post-2100 GHG emissions would need to be further reduced. For example, stabilization of CO2e concentrations at 485 ppm would require net CO2e emissions to go to zero in the very long run after 2100.
Given the CO2e concentrations for the various scenarios, we can also calculate the observed change in global mean temperature (from pre-industrial time) in 2100 under different climate sensitivities. Assuming the G8 goals (reducing global emissions to 50% below 2005 by 2050) are met, warming in 2100 would be limited to no more than 2 degree Celsius (3.6 degrees Fahrenheit) above pre-industrial levels under a climate sensitivity of 3.0 or lower.
It should be noted that the temperature change in 2100 in this scenario is not stabilized, so the observed change in global mean temperature in 2100 is not equal to the equilibrium change in global mean temperature. There are two reasons for this. First, while the G8 international goals stabilize global GHG emissions at 50% below 2005 levels, CO2e concentrations and temperature are not stabilized. Determining an equilibrium temperature under any scenario requires additional assumptions about post¬2100 emissions. If emissions remain constant post-2100, CO2e concentrations will continue to rise. Equilibrium temperature would only be achieved after CO2e concentrations are in equilibrium. Second, the inertia in ocean temperatures causes the equilibrium global mean surface temperature change to lag behind the observed global mean surface temperature change by as much as 500 years. Even if CO2e concentrations in 2100 were stabilized, observed temperatures would continue to rise for centuries before the equilibrium were reached.
Continued GHG emissions reductions after 2100 could stabilize CO2e concentrations at the 485 ppm levels achieved in 2100 in the G8 scenario. In order to achieve an equilibrium temperature change of 2 degrees (assuming CS = 3.0), CO2e concentrations must be stabilized below 485 ppm, requiring continued abatement beyond the level needed to stabilize concentrations at 2100 levels. It would be possible to reduce CO2e concentrations after 2100 below 485 ppm by even further reducing GHG emissions in the next century. An ‘overshoot’ scenario such as this would further reduce the equilibrium temperature change, making it possible to achieve the 2 degrees C target even with a climate sensitivity of 3.0.
Monday, October 19, 2009
How much government?
How heavy is the hand of government going to have to be for use to have any chance of reaching our climate goals? All of the talk of green jobs and growth opportunities associated with de-carbonizing distracts from just how reluctant we all are to make changes on our own. The Economist reports (http://www.economist.com/world/britain/displayStory.cfm?story_id=14649058&source=hptextfeature) that the UK Committee on Climate Change (appointed to advise the government on how to meet its targets for greenhouse-gas emissions) has concluded that far too little is being done. “Although recession is holding emissions back, they are dropping at an average annual rate of under 1%, rather than the 2-3% needed” to reach the 2020 reduction targets. “Consumers are not buying energy-efficient appliances or insulating their houses, carmakers are failing to get emissions down and power companies still prefer fossil fuels to greener alternatives. A bracing dose of re-regulation was prescribed: the CCC suggests compulsory emissions caps for cars, feed-in tariffs to help green-power producers and a state-enforced minimum carbon price to encourage nuclear and “clean” coal power stations.” If the same options arise in the U.S., will citizens accept such policies? Not without a lot more work to convince them of the true cost of not doing so.
Monday, October 12, 2009
Collaring cap and trade
Today’s joint editorial in the NY Times by Senators Kerry and Graham http://www.nytimes.com/glogin?URI=http://www.nytimes.com/2009/10/11/opinion/11kerrygraham.html&OQ=_rQ3D1Q26refQ3Dopinion&OP=248f9153Q2F8I,Q5C8KyeRZyy2585Q3DQ3Dt8Q5EQ3D8Q5EQ5E8yPkFkyF8Q5EQ5Em,ZZjSZcQ3EcM1Q3E2Mn is good news – a “deal” is evolving. Any such deal is going to involve (a lot of) compromises. It should be no surprise that things like nuclear energy and off shore oil exploration would end up coming into the negotiations. But Kerry and Graham also raise another issue which may seem innocuous but needs to be tracked with care. They write: “finally, we will develop a mechanism to protect businesses — and ultimately consumers — from increases in energy prices. The central element is the establishment of a floor and a ceiling for the cost of emission allowances. This will also safeguard important industries while they make the investments necessary to join the clean-energy era. We recognize there will be short-term transition costs associated with any climate change legislation, costs that can be eased. But we also believe strongly that the long-term gain will be enormous.” The use of such a price “collar” in a cap and trade system has been much discussed as a way of smoothing price changes and avoiding dissociative price shocks. But, and it is a big but, to speak of such collars as a way of “protect businesses — and ultimately consumers — from increases in energy prices” would be completely self-defeating if the goal of a cap and trade system is to use prices to limit carbon output! There simply is no free lunch here. And the fact of the matter is that to get the changes in carbon output we need prices will have to go up substantially above and beyond the push from increasing demand – especially as competition for energy (especially oil for petroleum) from China and India. Now maybe the talk of protecting businesses and consumers from increases in energy prices is just talk – designed to grease the way for a bill to pass. The bill can be far from perfect. But what it needs to do is put in place a mechanism that can reduce carbon even if its initial targets turn out to be far too low – like the current 2020 target in the House bill. The targets can be changed, as can the allowances under cap and trade. But to do all that, the collar mechanism needs to be a real collar – one that moves up with prices. In doing so, it can’t protect consumers from price increases, nor should it. All it can and should do is to smooth the upward path of those prices.
Monday, October 5, 2009
EPA moves
EPA’s announcement that it is going to act with or without Congress to regulate large carbon emitters is good news – good because it creates an incentive for the Senate to act and good, because if the Senate does not act, at least we get some movement in addressing the regulation of carbon output. But it is important not to overstate the limitation of this sort of move. In his article on the announcement the NYT writes: "Ms. Jackson described the proposal as a common-sense rule tailored to apply to only the largest facilities — those that emit at least 25,000 tons of carbon dioxide a year — which are responsible for nearly 70 percent of greenhouse gas emissions in the United States" (http://www.nytimes.com/2009/10/01/science/earth/01epa.html?scp=6&sq=epa%20climate%20regulation&st=cse). But that conflates carbon regulation with greenhouse gas regulation of which non-carbon output by agriculture constitutes a significant percentage. Even looking just at carbon, I am skeptical based on data from the Department of Energy for 2007 – see http://www.eia.doe.gov/oiaf/1605/ggrpt/carbon.html. Looking just at CO2, the really worrisome figure is petroleum which constitutes 2.5gt of the 6 gt total and most which (2 gt) is used in transportation. It will be harder to regulate greenhouse gas output by just attending to the largest facilities. Like it or not, regulation will have to have a much further reach.
Monday, September 28, 2009
The bad news and the good news
President Hu Jintao’s speech to the UN this week offered standard fair in on one hand when he pledged to “increase the share of non-fossil fuels in primary energy consumption to around 15 percent by 2020”. That is 15% of a moving target as China’s overall energy consumption is growing at a massive rate. On the otherhand he also said this: “We will endeavor to cut carbon dioxide emissions — (inaudible) — GDP by a notable margin by 2020 from the 2005 level” (according to the transcript of his speech provided by the Federal News Service). This is notable because for the first time, we have a declaration of a FIXED target and one that involves a reduction from current and planned levels of output even if the target is the 2005 level itself – which was 5.3 gigatons (billion tons) of CO2. That said, stabilizing at 450 ppm of CO2 is commonly assumed to require a worldwide cut from current levels of 28 gigatons to 18 gigatons. Assuming a world population stabilizing at 9 billion people with China at 1.5 billion, the per capita allocation for China would be 3 gigatons. That is below 5.3 gigatons by a really “notable margin”! There is also the worrisome use of the word ‘endeavor’ in his statement.
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