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Download How States Can Make a Difference on Climate Change
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Case for Climate Action: Policies Produce Major Co-Benefits Ned Helme, Executive Director Center for Clean Air Policy *** Phoenix, AZ April 29, 2004 Center for Clean Air Policy Non-profit environmental think-tank, founded by governors in 1985, to work with governments to develop practical strategies to protect AQ and climate Designed emission trading and climate policy measures for European Community and range of developing and Eastern European countries Major issues currently include climate change, air quality, transportation/smart growth Working with many states to take action on climate change (including CA, CT, MA, ME, NJ, NY, WA, WI) Projected concentrations of CO2 during the 21st century are two to four times the pre-industrial level Source: IPCC Effects of Warming Climate Melting glaciers and ice caps Rising sea level Adverse impacts on water supplies Heat waves & more severe storms Disruption of ecological systems, shift or loss of species Invasive species and vector-borne illness Changes in crop productivity Bleaching of coral reefs Premature deaths, lung disease (black carbon) Observed Evidence of Climate Change Global-average surface temperature increased by about 0.6 ºC over 20th century, 0.5 ºC since 1950 1990s warmest decade and 1998 warmest year in last 1000 years in Northern Hemisphere, 2003 3rd warmest year Widespread retreat of mountain glaciers during 20th century Northern Hemisphere spring and summer sea-ice extent decreased by 10-15% since 1950s Global-average sea level has increased by 10-20 cm during 20th century 0.5-1% per decade increase in Northern Hemisphere mid-latitude precipitation during 20th century 2-4% increase in frequency of heavy precipitation events in Northern Hemisphere mid- and high-latitudes over latter half of 20th century Policy Timeline (1) Reduction in carbon intensity (environmental incentives) Creation of material new energy sectors (economic growth incentives) 1990 2015 Policy to support emission constraints 2040 Policy to support economic development and competitiveness 2100 Policy to support technology breakthrough Source: BP Policy Timeline (2) The World’s Leading Emitters of CO2 China FSU Japan India Germany Texas UK Canada Italy Australia France Mexico California Ohio Pennsylvania Netherlands Florida Illinois New York Michigan New England New Jersey Belgium Wisconsin Washington Maryland 0 100 200 300 400 MMTCE CO2 (1998) 500 600 700 800 Co-benefits of What? Difficult to talk about Co-benefits without identifying which policy is primary Comm. Bob Shinn of New Jersey: CO2 reduction is the unifying theme for environmental/energy policy If you reduce CO2, most other pollutants are swept up in the process Climate Policy Touches All Sectors of the Economy Smart Growth/infrastructure Vehicles Energy Efficiency Renewable Energy Energy Fuels Consumer Products Agriculture and Forestry Waste Co-Benefits of Climate Policies Health, Air Quality Energy Security Technological Innovation Enhanced Mobility Economic Competitiveness Infrastructure cost savings Economic Development/Jobs Approaches to Reducing CO2 and Achieving Co-Benefits 1. “Follow the Money” – Directing state budget outlays toward climate-friendly investments 2. Moving Markets - Using state financial leverage to move new product markets 3. Regulations or Incentives – push and pull policies to encourage reductions and technological innovation Shifting Funding Towards Better Alternatives Funding transit, biking, and walking facilities, and encouraging in-fill and transit-oriented development. – 50% difference in VMT in dense areas vs. suburban sprawl New York: State Energy Plan - redirects State funding toward energy-efficient transportation alternatives – evaluates GHG impacts New Jersey: Executive Order 4 - requires that state funding be consistent with smart growth principles Massachusetts “fix-it-first” policy + targeting infrastructure monies to climate-friendly projects State Funding for Energy Improvements 14 states have public benefit charge (PBC) funds to pay for renewable energy & 16 have funds for energy efficiency » Fee added to electricity rate to pay for projects California program spent $542 million over 3yr period; ~$1.35 billion over next 10 yrs. New York spends ~$142 million per yr. on EE from PBC New Jersey spends ~$90 million per yr. on EE Moving Markets (1) State spending can spur markets through targeted procurement Ct exec order requires state RE purchases of 20% by 2010, 100% by 2050 Many states set energy use efficiency goals Massachusetts – Replacement of state vehicles with high-efficiency vehicles, disposal of non-essential SUVs, bar SUV purchase in future New York – clean fuel bus purchase program Moving Markets (2) State tax and grant programs can encourage particular products: Indiana – 30% of project costs for fuel cells & CHP Maryland – up to $2,000 excise tax exemption for purchases of hybrid vehicles, sales tax exemption for energy star AC, heating & refrigerators Georgia – up to $2500 tax credit for electric & biofuel vehicles Arizona – 25% tax credit for home solar and wind New York – grants for energy efficient industrial process improvements Regulation vs. Incentives Regulations include appliance efficiency standards, emission caps, portfolio standards Incentives include R&D programs, tax credits, production credits, loan programs Tradeoff between policy based regulation or market incentive » Regulation = less politically popular, less impact on state budget, broader participation, more certainty of achieving goal » Incentives = more politically popular, more impact on state budget, voluntary participation, less certainty Regulations/Incentives to Encourage Renewables Regulation: » CA Renewable Portfolio Standard (RPS) - 20% by 2017 equates to between 3,000 and 8,000 MW of additional RE » Tx RPS coupled w/ robust REC trading market – 2000 MW by 2009 Incentive: » MI NextEnergy program – 20-year state and local tax exemption for alternative energy producers and system designers » MN Renewable Energy Production Incentive - generation incentive payments of $0.015 per kilowatt-hour (kWh) for qualifying renewable energy technologies Renewable Portfolio Standards Renewable Energy Expected From State Standards* 20,000 18,000 12,385 MW of New Renewable Energy 7,540 MW of Existing Renewable Energy 16,000 California Megawatts 14,000 12,000 10,000 Nevada AZ & NM 8,000 Texas 6,000 Minnesota IA & WI NJ & PA Connecticut Massachusetts Maine 4,000 2,000 0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 * Projected development assuming states achieve annual RPS targets. Source: Union of Concerned Scientists Electricity Sector Regulations/Incentives Regulation: Mass, NH cap CO2 emissions from power plants, RGGI developing 9 state cap and trade strategy by April, 2005 WI/MN – standards for electric transformers Incentives: » Texas – streamlined permitting for clean gen » Ohio – Third Frontier Project –fuel cells incentives » Illinois – R&D on geologic carbon sequestration Curbing Automobile Emissions 13+ states implemented transport measures with climate benefits California GHG standard for automobiles » Regulation to reduce emissions 20% by model year 2009,more by 2015 If States that have CA stds. for LEV (MA, NY, VT, NJ, CT and ME) and Canada follow this std.,29% of N. Amer. auto market would be included Minnesota mandates 2% biodiesel by 2005, numerous ag states have ethanol requirements + sales tax redux Strategies for Coal States: the Real Challenge potential adverse economic impacts of reduced coal use block climate action Key lies in new technologies to remove carbon from coal generation – IGCC w/CCS State/fed action needed to commercialize the technology, reduce costs and improve performance Coal States Strategy States can provide incentives thru utility ratemaking, R&D programs Fed loan guarantees can reduce financing costs and risk Coupling emphasis on IGCC/CCS w/ RPS and EE efforts can reduce emissions w/ less impact on coal market “Laboratories of Democracy” Many environmental laws enacted by states have charted the way for later passage of major national legislation State early action, in 1980’s, to address acid rain had major impact on passage of national legislation » Acid rain laws initially introduced in a number of states California’s air quality laws laid groundwork for national air quality law passed in early 1970 Conclusions Range of cost-effective opportunities for climate policy Many have significant economic and environmental co-benefits States have many policy options that can be tailored to fit local conditions State programs can be linked thru trading to EU, Canada and others Center for Clean Air Policy www.ccap.org [email protected] Tel: 202-408-9260 Global mean surface temperatures have increased