Download The California Model for Combating Climate Change

Institute of Transportation Studies
University of California, Davis
The California Model for
Combating Climate
Change
Daniel Sperling
UC Davis and CARB
Beyond Science: The Economics and Politics of
Responding to Climate Change
Rice University
February 8, 2008
Model: “something that is copied or used as the
basis for a related idea, process, or system”
Model: “an excellent example that deserves to be
imitated”
The ultimate solution?!
Human Powered Bus imported from Eindhoven,
Netherlands
Propulsion: 32 pedal devices, 80 meters of chain.
Traveling speed: 12 mph.
California Well Positioned to Lead on Climate Policy
• Large, relatively isolated market
• Political space:
 Coal and Detroit car companies have little political
power in California;
 bi-partisan political support
• Innovative consumers
• Innovative industry: home to venture capital and
past industrial revolutions (IT and Biotech)
A laboratory for others to learn from
California is a Little Different
Transport Share of GHGs Higher than US, Electricity Share Lower
Transportation
38%
Residential
6%
Commercial
3%
Electricity
Generation
(In-State)
12%
Electricity
Generation
(Imports)
13%
Industrial
20%
Agriculture
6%
Total = 480 MMTCO2e
Source: CARB (2007)
Early California GHG Initiatives
Voluntary and Regulatory
• Green Building Standards: construction materials and practices,
lighting, HVAC standards
• Energy Efficiency Appliance Standards
• California Climate Action Registry: voluntary reporting of direct
and indirect greenhouse gas emissions by private and public sector
• Electric Utility Renewable Portfolio Standard: 20% of utility retail
sales of electricity by 2017, or an increase of at least 1% per year.
• Vehicle GHG Standards: Law passed in 2002, regs finalized in
2004, now tied up in litigation (more on this later)
• 2050 Target: Executive Order (June 2005) to Reduce GHG
emissions 80% below 1990 levels by 2050
AB 32: CA Global Warming Solutions Act of 2006
• Requires economy-wide GHG reductions to 1990 levels
by 2020 (~28% below “business as usual”)
• Includes carbon dioxide (CO2), methane (CH4), nitrous
oxide (N2O), hydrofluorocarbons (HFCs),
perfluorocarbons s (PFCs), and sulfur hexafluoride (SF6)
-- same as in Kyoto Protocol
• Almost everything is on the table
• CA Air Resources Board (CARB) was designated as lead
agency for implementation (because of reputation for
technical capabilities and political independence)
California’s 2020 and 2050 Targets
California GHG Emissions (MMTCO2e/yr)
}
600
~28%
500
400
300
200
Historical
Forecast
Targets
100
0
1990
2000
2010
2020
2030
2040
2050
AB 32 Timeline
2008
2007
2009
2010
2012
2020
Additional
emission
reduction
strategies
Scoping
plan rules
take effect
Adopt early
actions
Mandatory
reporting
Scoping
plan
adopted
Early action
regulations
take effect
GHG
emissions
reduced to
1990 levels
Early Action Measures (as part of AB 32)
 Low Carbon Fuel, Auto Refrigerants, Tire Inflation,
Truck Efficiency, Port Electrification, Landfill Gas,
Semiconductor Perflurocarbons, Can Propellants,
Reduced Sulfur Hexafluoride
 Rules adopted in 2008; take effect Jan 2010
Policy and Political Issues
• Bipartisan and industry support for Climate Policy (AB 32),
but …
 Tension about Schwarzenegger (R) “stealing” this issue from
Democrats
 Fights over “details” by industry and business
• Each sector must assume its “fair share”?
• How to address emissions in diffuse sectors such as
agriculture, land use, vehicle travel?
• Market vs regulatory instruments? Cap and trade??
• CARB can’t do it alone
 How to engage public (to take responsibility)
 How to engage other govt agencies (transportation, forestry, ag,
PUC, local govts etc)
 Need help from Feds with air and maritime
3 Strategies to Reduce GHG Emissions from
Transport Sector … What CA is Doing
I. More Efficient Vehicles
II. Lower Carbon Fuels
III. Less VMT (via changes in land use, infrastructure, modal shifts, travel
policies)
Two Observations
 80% reduction (or even 30%) will require transformation of oil and
automotive industries, and eventually transport sector.
•
Probably possible to get these reductions via technology, but it would result
in a very expensive and inefficient transportation system)
 Should transport sector have same reductions as other sectors?

Conventional wisdom says no, because cheaper and easier in other sectors
… but economic analyses largely ignores innovation processes and possible
shifts in consumer preferences
Illustrative Split of Transport GHG Emission
Reductions to Achieve 80% Target (US)
1200
Million tonnes C
1000
Emissions
(2050, BAU)
Reductions
(2050)
800
Efficiency
Other
600
VMT
Fuels
400
200
Passenger
Other
Passenger
0
2050 BAU
2050
(80% reduction
Inspired by Lashof and
Martin-Perara, May 2007
I. Vehicles
•
•
•
Addressed by 2002 Pavley law (AB 1493)

Requires 30% reduction in GHG emissions/mile from
new light duty vehicles by 2016

12 other states adopted this California law
The tortured history of Pavley law

Auto Industry sued, lost in 2007 to Vermont and
California, but now appealing

EPA rejected California waiver to enact regulations in
December 2007, and California is now suing EPA
My expectation: Next Administration will approve
waiver, or Congress will pass a law enabling CA
and other states to proceed
With Pavley Standards, California Would Be Far
Ahead of US, But Still Lagging Europe and Japan
EU:
CA:
46 mpg in 2012 (130 g/km)
~37 mpg in 2016
~44 mpg in 2020
US:
35 mpg in 2020
}
If EPA loses (another)
lawsuit and/or approves
waiver request
But Pavley Law Is Not Enough
• Shortcomings of Pavley law (AB 1493)
 Ignores vehicle use (VMT)
 No incentives for consumers (feebates?)
 Large start up barriers to very low carbon vehicles (H2FCVs,
PHEVs, BEVs)
 Does nothing to create alternative fuel distribution system
(electricity, H2, biofuels)
• ZEV mandate helps by accelerating advanced
technologies
 25,000 ZEV vehicles in CA (and other ZEV states) in 2012-14, and
50,000 in 2015-17
 ZEV program likely to be transformed shortly to focus on GHG
benefits, rather than local air pollution
II. Fuels to Reduce GHGs
Biofuels
Hydrogen
Electricity
Many Fuel-Related Strategies to Reduce Oil Use and
GHGs, But LCFS Appears to be Most Effective
• Subsidies and Mandates
 Difficult for government to make correct decisions
• “New” Renewable Fuel Standard
 Simpler than LCFS but awkward treatment of GHGs
• Carbon Tax, and Cap and Trade
 Not very effective for transport fuels
• Low Carbon Fuel Standards
 Reduces oil use AND greenhouse gases
Why Cap and Trade and Carbon Taxes Aren’t Enough
(for transport sector)
• ELECTRICITY: $25/ton CO2 price would have big effect
Electricity suppliers have many low-carbon choices (hydro, nuclear, wind,
CCS)
• TRANSPORT FUELS: carbon taxes and caps would have little effect
 Oil companies unresponsive because they have few choices
 Drivers unresponsive to higher fuel prices (whether due to carbon
taxes or caps)
Thus, something more effective than cap and trade and carbon taxes
is needed to motivate change and innovation with transport fuels
Key Features of California LCFS
• 10% reduction in GHGs by 2020 (with further reductions
to follow)
• “Carbon” intensity measured on lifecycle basis
 Global warming intensity, measured in gCO2e/MJ
 Includes CO2 and other GHGs
 Adjusted for drivetrain efficiency: Gasoline = 1.0 by definition,
Diesel = 0.78, Electricity = 0.20, H2 = 0.47 (proposed)
•
•
•
•
Point of regulation is oil refineries (and oil importers)
Performance standard (no ‘picking winners’)
Allows trading and banking of LCFS credits
Could be implemented in addition to tax or cap
Adopted and now in rule-making.
Principles Underlying LCFS
• Create durable framework for orchestrating near and
long term transition to low-carbon alternative fuels
 Send consistent signals to industry and consumers to reduce
GHGs
• Stimulate technological innovation
 Performance standard plus credit trading
• Government does not pick winners (or losers!)
• Use lifecycle approach
• Consistency/compatibility between states, US, EU,
Japan, China, others
How to Comply?
1. Improve energy efficiency or lower upstream CO2
emissions (eg, eliminate flaring)
2. Blend in fuels with lower carbon intensity (eg,
federally-mandated RFS advanced biofuels)
3. Sell fuels with low carbon intensity (e.g.
electricity)
4. Buy credits from other fuel providers
Other Possible Fuel Policies/Rules
• Minimum requirements for H2 distribution by fuel
suppliers
• Additional incentives for non-petroleum vehicles
(especially electricity and H2)
• Carbon taxes or cap and trade (economy-wide)
with auctions to generate revenue to pay
“transition costs” (start-up barriers, R&D, equity)
 but ‘triiple-regulation’ is not appreciated by oil
companies
III. VMT/Land Use
• Note that transport is least innovative sector, and that VMT is largely
ignored in energy/climate debates
• California: Nothing in place, but Attorney General Jerry Brown is
“requiring” cities and others to fully consider GHGs in all environmental
reviews
Ideas under consideration in California
•
•
•
•
•
Pricing of roads, vehicle use
GHG criteria in allocating federal and state transport funds
Conformity of transport and GHG plans
City/county carbon budgets
Invest in low-carbon transport modes (high speed rail, enhanced
transit, etc)
• Reform transit and taxi monopolies to encourage innovation
• Reform transport financing to support innovative mobility services
Need Integrated Solutions to Reduce VMT …
Expanding transit by itself does not reduce oil use and GHGs (on
average). Energy intensity of buses is about same as cars. Need to
combine transit reform with other strategies.
4500
3500
1500
1000
500
0
Rail Transit
2000
Bus
2500
Light Trucks
3000
Cars
Btu/passenger-mile
4000
Cars
Light Trucks
Bus
Rail Transit
These are averages for
US. Actual intensities
vary dramatically
across time of day,
routes, and regions
(and by trip purpose for
cars).
Source: US DOE and ORNL, Transportation Energy Data Book, Edition 26, 2007
Sperling’s (and California’s?) Policy Principles
for Climate Change
 Do not pick winners
 Push responsibility downstream as much as possible (cities, HHs,
companies)
 Create choice (vehicles, modes, fuels), which opens up the
policy/politics envelope
 Create durable policy frameworks for carbon
• Vehicle and fuel stds, feebates, fuel tax restructuring, “conformity” of
GHG and transport plans, perhaps carbon caps for cities/counties
 Target market failures and start-up barriers (esp for non-liquid fuels)
 Reform transport sector (together with MPOs and locals)
• Reform “transit” (esp use of innovative mobility services)
• Encourage private investment (and innovation)
 Encourage bottom-up and top-down policy experimentation (within
overlapping federal-state-local responsibilities)
[email protected], www.its.ucdavis.edu
CARB Climate Change Web Site http://www.arb.ca.gov/cc/cc.htm