Download Presentation

Survey
yes no Was this document useful for you?
   Thank you for your participation!

* Your assessment is very important for improving the work of artificial intelligence, which forms the content of this project

Document related concepts

IPCC Fourth Assessment Report wikipedia, lookup

Climate change, industry and society wikipedia, lookup

Surveys of scientists' views on climate change wikipedia, lookup

Effects of global warming on humans wikipedia, lookup

Public opinion on global warming wikipedia, lookup

Solar radiation management wikipedia, lookup

Climate change and poverty wikipedia, lookup

Climate change and agriculture wikipedia, lookup

Carbon Pollution Reduction Scheme wikipedia, lookup

Politics of global warming wikipedia, lookup

Economics of global warming wikipedia, lookup

German Climate Action Plan 2050 wikipedia, lookup

Economics of climate change mitigation wikipedia, lookup

Mitigation of global warming in Australia wikipedia, lookup

Low-carbon economy wikipedia, lookup

Years of Living Dangerously wikipedia, lookup

Energiewende in Germany wikipedia, lookup

Transcript
The Economics of Alternative Energy Sources
and Globalization: The Road Ahead
Views from the U.S. Senate
November 16, 2009
Hayden Milberg
Senior Economist
Senate Agriculture Committee
Climate Change – Legislative Update
• House Committee on Energy & Commerce reported
H.R. 2454 May 21, 2009, by a vote of 33-25.
• The full House of Representatives passed the bill on
June 26, 2009, by a vote of 219 – 212.
• Senate Committee on Environment & Public Works
reported version on November 5, 2009 by a vote of
11-1. All Republican members on the Committee
boycotted vote.
Cap & Trade
• Cap
– S. 1733 has a more stringent cap than H.R. 2454 between 2017 and
2029. From 2030 onward, both bills have the same cap on emissions.
• Allowance Allocation
– The Senate bill would auction a much larger share of allowances for
deficit reduction. This off-the-top allocation reduces the share of
allowances available for other purposes.
• Offset Treatment and Implementation
– Both bills would allow covered entities to submit 2 billion tons of
offsets each year. However, the House program allows 50% domestic
and 50% international, whereas the Senate allows 75% domestic and
25% international.
Waxman-Markey w/ Peterson
• Directs USDA to establish an offset program from
domestic agricultural and forestry sources. The
Committee-passed bill gave authority to EPA.
• Requires USDA to publish a list of eligible offset
practice types – bill includes list of potential
practices.
• Creates “term offset credits,” which are supposed to
allow agriculture producers to adopt mitigation
measures for a short (five-year) period of time
Kerry-Boxer
• President to establish an offset program and an
initial list of eligible practices; priority given to offset
project types that are well-developed.
• New, special environmental considerations for
forestry projects, i.e. enhancing biological diversity
and sustainable forestry practices – not required of
any other practices.
• Establishes a Carbon Offsets Integrity Unit within DOJ
to supervise and coordinate investigations and civil
enforcement of the carbon offsets program.
Stabenow
• S. 2729 introduced as stand-alone bill on 11/4/09.
• Directs EPA and USDA to jointly establish an offset
program; proscribes specific duties for USDA
• Directs EPA and USDA to establish lists of eligible
projects; USDA’s initial list must include many
agriculture and forestry practices – initial list of
eligible projects and the list of eligible projects are
different.
• Established five and ten year crediting periods,
similar to term offset credits
Peterson vs. Stabenow
• Peterson gives all authority to USDA for
agriculture/forestry projects. Stabenow creates a
joint program with a specific role for USDA.
• Peterson will likely make more offsets available to
producers. Under Stabenow, it’s not likely they will
be available in the early years. There’s a subtle bias
in her bill toward non-agriculture projects.
• Stabenow has stronger language for verification,
accounting, standards, etc provisions.
• Both bills require implementation within one year.
Impact on Agriculture - Key Questions
• Net farm income
– What is effect of higher input prices?
– Will offset income be larger than increased costs?
• Environmental benefit
– Will cost of implementing cap and trade provide
real and tangible environmental results?
• Land use changes
– Will new incentive structure result in a change in
production practices and outputs?
Economic Analyses
• USDA
– Short term costs low. Medium and long term, costs rise but remain
modest. Benefits from offset market rise and will likely overtake costs.
• Agriculture & Food Policy Center
– 71 of 98 representative farms have lower ending cash reserves.
• Nicholas Institute (Baker, et al)
– Producer surplus increases; climate mitigation opportunities increase
the demand for land, reduce supply, and result in market impacts.
• 25x25
– Net returns to agriculture are positive, afforestation of cropland and
major shifts in commodity cropland will not occur.
Impacts on Energy Costs
(Change from Baseline)
EIA Basic HR
2454
EIA High
Offset
EIA High
Cost
EPA HR2454
(Scenario 2)
Diesel fuel
7.1%
4.1%
7.7%
3.9%
Electricity
2.6%
3.0%
4.1%
13.5%
Industrial natural gas
18.0%
10.8%
25.8%
8.5%
Coal
146.9%
94.9%
164.3%
81.0%
Diesel fuel
12.4%
7.0%
14.4%
5.6%
Electricity
19.5%
10.6%
29.2%
14.1%
Industrial natural gas
21.8%
7.4%
38.2%
10.5%
2020
2030
Coal
283.3%
185.8%
323.5%
118.0%
Source: EIA and EPA analysis of HR 2454, the House climate change bill, 2007 $
Impacts on Energy Use
(Change from Baseline)
EIA Basic HR
2454
EIA High
Offset
EIA High
Cost
EPA HR2454
(Scenario 2)
Liquid Fuels
-3.1%
-2.3%
-2.8%
-2.4%
Natural Gas
-2.7%
-2.3%
-0.5%
-7.4%
Coal
-15.6%
-10.2%
-17.2%
-20.8%
Nuclear
7.7%
3.3%
0.0%
0.0%
Renewable
17.3%
10.6%
20.2%
27.3%
2020
Source: EIA and EPA analysis of HR 2454, the House climate change bill, Quadrillion Btu
Impacts on Energy Use
(Change from Baseline)
EIA Basic HR
2454
EIA High
Offset
EIA High
Cost
EPA HR2454
(Scenario 2)
Liquid Fuels
-5.0%
1.6%
-1.3%
-3.8%
Natural Gas
-12.8%
1.9%
7.0%
-16.6%
Coal
-44.9%
44.3%
-18.3%
-42.6%
Nuclear
74.2%
-25.9%
-20.0%
50.0%
Renewable
26.3%
-4.7%
9.2%
57.1%
2030
Source: EIA and EPA analysis of HR 2454, the House climate change bill, Quadrillion Btu
H.R. 2454 – Nuclear Production
(Scenario 2)
Estimated Crop Prices
USDA
FAPRI-MI*
AFPC**
Near (2020)
0.40%
3.35%
2.40%
Medium (2030)
4.60%
3.95%
-
Long (2050)
9.60%
8.45%
7.50%
Near (2020)
0.40%
1.60%
2.60%
Medium (2030)
2.20%
2.00%
-
Long (2050)
5.19%
4.40%
4.20%
Corn
Soybeans
*Average of dryland and irrigated.
*Estimates from first and last year of analysis.
USDA – Impacts on Net Farm Income
(Change from Baseline, 2005 $)
Item
Near Term
Medium Term
Long Term
Total Receipts
0.0%
0.1%
0.3%
Total Expenses
0.3%
1.1%
2.2%
Fuel, oil and electricity
6.4%
11.1%
22.2%
Fertilizer and lime
0.3%
9.5%
19.9%
-0.9%
-3.5%
-7.2%
Net Farm Income
Source: Office of the Chief Economist, USDA
Offset Revenues
• USDA/EPA
– Estimated gross revenues from offsets associated
with H.R. 2454 grows from $2.1 billion in the near
term to $28.4 billion in the long term.
• NI/TAMU/FASOMGHG
– Direct GHG payments generate annualized
revenues of $7.6 billion ($15/tCO2e) to $35 billion
($50/tCO2e).
FASOMGHG – Agriculture Cropland
(July 2009)
2020
2030
2040
2050
Base
308,426.27
306,105.43
301,916.80
297,220.95
$15 @ 5%
292,498.20
280,623.33
262,350.59
243,543.68
Change from Base
-15,928.07
-25,482.09
-39,566.21
-53,677.27
Scenario
FASOMGHG – Land Use Change
(July 2009)
2020
2030
2040
2050
EPA
$16.31
$26.54
$43.37
$70.40
EIA High Offsets
$20.52
$41.90
EIA Basic
$31.75
$64.83
EIA High Cost
$35.37
$72.23
Allowance $/tCO2e
Scenario
Thousand Acres (Cropland & Cropland Pasture)
Base
11,555.91
12,481.17
12,893.73
13,730.73
$30
-20,786.88
-29,623.98
-32,878.58
-25,780.30
$15 @ 5%
-6,215.58
-14,828.97
-30,009.13
-45,856.50
$50
-26,729.59
-37,125.51
-43,252.73
-42,697.36
$30 @ 5%
-11,666.22
-26,062.89
-39,512.06
-51,771.40
FASOMGHG
(Change in Base, Million bu, July 2009)
2020
2030
2040
2050
Production
Corn
-735.62
-730.88
-1,553.83
-4,423.85
Soybeans
-358.93
-934.27
-1,323.59
-1,676.58
Corn
-164.75
-274.77
-544.36
-1,712.90
Soybeans
-153.82
-279.89
-272.74
-146.64
Exports
Agricultural & Food Policy Center
Farms by type with higher or lower ending cash reserves
Farm Type
Higher
Lower
Total
Feedgrain/Oilseed
17
8
25
Wheat
8
3
11
Cotton
1
13
14
Rice
0
14
14
Dairy
1
21
22
Cattle Ranches
0
12
12
Total
27
71
98
Source: Economic Implications of the EPA Analysis of the CAP and Trade Provisions of H.R. 2454 for U.S.
Representative Farms, August 2009
RFS2 Regulations – Cellulosic Mandate
• The EISA included a separate carve out for
advanced (cellulosic) biofuels starting in 2010,
100 million, gallons growing to 21 billion
gallons in 2022.
• No commercial scale plant yet online.
• EPA considering lowering 2010 mandate to a
unspecified level.
E15
• On March 6, 2009, Growth Energy (on behalf of 52
U.S. ethanol producers) applied to the EPA for a
waiver from the current Clean Air Act limitation on
ethanol content in gasoline.
• Under EISA, the EPA Administrator must grant or
deny the waiver request within 270 days of receipt
(December 1, 2009).
• Likelihood that EPA will work past December 1
deadline to “review more test results.”
Biomass Crop Assistance Program (BCAP)
• The BCAP was authorized by Title IX of the 2008
Farm Bill.
• Provides assistance for the establishment and
production of eligible crops for the conversion to
bioenergy and matching payments for the collection,
harvest, storage and transportation (CHST) of eligible
material.
• June 11, 2009 NOFA for CHST. $25 million available
for FY 2009.
• Establishment provision subject to a pending EIS.
Congressional Agenda – 111th Congress
• Cap and Trade legislation unlikely to be
considered by the Senate until 2010.
• Unclear if Senate will move a separate energy
bill.
• Suspension of EISA indirect land use change
provision unlikely before release of the final
RFS2 regulation.