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  • Author: Varun Sivaram, Matt Bowen, Noah Kaufman, Doug Rand
  • Publication Date: 01-2021
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: President-elect Joe Biden has called climate change one of the four most important crises facing the country and pledged ambitious climate action.[1] At the heart of his strategy to slash US and global emissions is a focus on developing new and improved technologies to make clean energy transitions more affordable. During the campaign, Biden pledged a “historic investment in clean energy innovation.”[2] Indeed, boosting funding for energy research, development, and demonstration (RD&D) is widely popular among both Republicans and Democrats and represents a rare legislative opportunity for advancing climate policy under a razor-thin Democratic majority in Congress.[3] In December 2020, Congress passed the most sweeping energy legislation in a decade, attached to the $900 billion COVID-19 stimulus package, and authorized boosting clean energy RD&D funding.[4] Yet such investments alone may not be sufficient to successfully commercialize critical clean energy technologies. Today’s energy industry presents daunting barriers that impede the swift adoption of newer, cleaner technologies. As a result, the private sector underinvests in scaling up promising technologies and building out clean energy infrastructure.[5] Therefore, in addition to funding energy RD&D (“technology-push” policies), government policies should bolster market demand for clean energy to encourage private investors and firms to scale up and commercialize new technologies (“demand-pull” policies). Still, there are steep political obstacles in the way of many ambitious demand-pull policies. For example, President-elect Biden has called for economywide measures such as a clean electricity standard and $400 billion of public procurement of clean products such as electric vehicles.[6] These policies would create large markets for mass deployment of clean energy and speed a clean energy transition. But enacting them requires substantial new regulations and appropriations from Congress, a challenging feat even given the new Democratic control of both chambers of Congress. Fortunately, there is a set of targeted demand-pull measures that the Biden administration can immediately use—with existing statutory authority and without requiring massive new appropriations—to create early markets for promising clean energy technologies. These measures, which we call “demand-pull innovation policies,” fill a niche between RD&D investments that create new technology options and policies that support the large-scale deployment of clean energy. Demand-pull innovation policies focus narrowly on creating and shaping early markets for emerging technologies. For example, targeted government procurement, prize competitions, or milestone payments can provide early markets for clean energy technologies that have been developed with the aid of public RD&D funding. The government can also coordinate private procurement or otherwise catalyze private market adoption through certification and standard-setting processes. Such demand-pull innovation policies have extremely high leverage and have transformed limited public investment into flourishing private commercial markets across the space, medical, and energy fields.[7] Coherently pursuing demand-pull innovation policies will require coordination across the federal government. To this end, the incoming Biden administration should consider creating a new government office, the Energy Technology Markets Office (ETMO), to spearhead the scale-up and commercialization of promising clean energy technologies. The ETMO could be housed within the Department of Energy (DOE) to take advantage of the DOE’s deep expertise in energy technologies and markets. Indeed, in the recently passed Energy Act of 2020 (Division Z of the Consolidated Appropriations Act of 2021), Congress directed the DOE to build its capabilities to pursue demand-pull innovation policies.[8] In the same legislation, Congress also authorized the DOE’s Office of Technology Transitions, which could alternatively lead the demand-pull innovation agenda. Regardless of whether the administration creates a new office or augments an existing one, in order to maximize their potential impact, demand-pull innovation policies should not be the domain of only the DOE. Rather, the DOE should collaborate with a range of federal agencies—many of which, such as the Department of Defense, have sizable resources to invest in emerging technology procurement—to enact policies and pursue public-private partnerships to build market demand for the innovations critical to decarbonization. In concert with new RD&D investments in clean energy innovation, demand-pull innovation policies could be a powerful tool to speed the adoption of new technologies and cultivate advanced energy industries that can manufacture and export US innovations.
  • Topic: Climate Change, Energy Policy, Environment, Science and Technology, Green Technology, Carbon Emissions
  • Political Geography: North America, United States of America
  • Author: Edmund Downie
  • Publication Date: 04-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: China’s Global Energy Interconnection (GEI) initiative presents a transformational vision for meeting the world’s growing power demand with a globally interconnected electricity grid. The concept involves ultra-high-voltage transmission lines strung across vast distances and smart grid technology tapping large-scale renewable power sources. Chinese President Xi Jinping first touted GEI’s goal to “facilitate efforts to meet the global power demand with clean and green alternatives” at the UN General Assembly in 2015. The ambition of the GEI vision is enormous, especially since there is very little cross-border trade in electricity around the world today. Regional electricity integration initiatives championed by development banks and multilateral organizations have largely struggled against the formidable political, economic and technical complications that accompany interstate electricity trade. China has seen these challenges firsthand in its participation in the Asian Development Bank’s Greater Mekong Subregion electricity trade endeavor, which has progressed fitfully since the 1990s amid regional infrastructure gaps and uneven political support from member states. This report, prepared as part of the Belt and Road Initiative series published by Columbia University’s Center on Global Energy Policy, uses a case study of power trade in the Greater Mekong Subregion to assess the prospects for GEI in catalyzing energy integration around the world. It discusses why Greater Mekong Subregion integration has been slow, how GEI might help accelerate interconnection in the area, and what lessons the region offers for understanding the overall outlook for GEI. Based on this study, the author finds the following: Establishing a GEI-style global energy grid backbone by 2070 would require overcoming an extraordinary set of political challenges. The global grid outlined by GEI for the coming decades serves more as a demonstration of technical potential than a strict blueprint to be implemented. The limited scale attained thus far by the Greater Mekong Subregion project for grid integration and cross-border electricity trading demonstrates the headwinds such multinational efforts can face. Weak internal power sector development in recent decades has left some member states without the generation surpluses and robust power grids necessary to support meaningful levels of trade. In addition, power trade requires a strong degree of interstate political trust, motivated engagement by national utilities, and support from civil society players for the specific generation and transmission projects involved. Integration backers have historically struggled to build consensus across this diverse array of stakeholders. While enormous generation and transmission infrastructure projects are core components of the GEI vision and dovetail with the interests of China’s domestic proponents, considerable debate persists about their merits for fostering the renewables transition. Ultra-high-voltage transmission, a specialty of Chinese utilities, is a particular flashpoint. State interest in cross-border trade has been increasing across many regions in recent years, and more gradual gains in power trade around the world that can aid the renewable transition and bolster regional solidarity are possible. China can contribute greatly to this process: as an investor and contractor in grid projects abroad, as a member state of integration initiatives in Asia, and as an advocate of grid integration in international fora. GEI’s ultimate impact will depend in part on how advocates within China reconcile tensions between strengthening cross-border power trade and promoting domestic priorities, such as advancing the country’s own industrial policy objectives.
  • Topic: Climate Change, United Nations, Infrastructure, Green Technology, Electricity
  • Political Geography: Global Focus
  • Author: Jason Bordoff
  • Publication Date: 03-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: The COVID-19 pandemic has disrupted daily life, caused widespread sickness and fatalities, and sent the global economy careening toward a depression. Governments have responded by taking unprecedented steps to shut down entire cities, ban travel, and isolate nations—extreme measures that are giving hope to climate activists that similarly ambitious policies might be possible to address global warming, which many consider a similar existential threat. Yet that would be the wrong lesson to draw, as the very same barriers preventing an effective COVID-19 response continue to keep climate change action out of reach. Scientists warn that the impacts of COVID-19 will rise sharply over time, threatening the lives of vast numbers of people, particularly those most vulnerable. They warn that climate change, too, will severely harm many over time, albeit not with the same rapidity. If governments and companies can take extreme actions to cancel sports seasons, shut down workplaces, and restrict movement, surely they can take similarly drastic steps to change how we produce and consume energy?
  • Topic: Climate Change, Environment, Public Health, Pandemic, COVID-19
  • Political Geography: Global Focus
  • Author: Kevin Tu
  • Publication Date: 06-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: The novel coronavirus (COVID-19) pandemic is inflicting high human costs in China and around the world. The stringent quarantine measures imposed by the Chinese government have severely affected the country’s economic activity, with profound energy and climate implications
  • Topic: Climate Change, Energy Policy, Environment, Public Health, Pandemic, COVID-19
  • Political Geography: China, Asia
  • Author: Philippe Benoit, Kevin Tu
  • Publication Date: 07-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: China’s dramatic economic growth in the 21st century has made it not only the second largest economy in the world but also a powerhouse in the global energy system. Now, as the top energy consumer and the biggest emitter of greenhouse gases, China is being closely watched and judged as its impact on energy markets and climate grows more profound. Looking forward, many issues are expected to shape the evolution of China’s energy sector, not least of which is its development status. While China’s economic might makes it a superpower alongside the United States, it still faces many of the major challenges of a typical developing country, such as widespread energy poverty, including 400 million people without access to clean cooking, significant air pollution, and dependence on increasing energy use to fuel future economic growth. Its modest income per capita qualifies it as a middle-income developing country. Evaluating China’s development status is not just an academic exercise. How China views itself and its challenges and how the international community classifies it carry real-world consequences that can significantly impact how the country manages its energy needs going forward, what fuels it uses, how it interacts with energy and other partners, and the level of its contributions and commitment to climate change mitigation and adaptation efforts worldwide. Understanding the nature and implications of China’s development situation can help in designing energy policies and fostering an international framework that better promote sustainable growth both within the country and globally. This paper examines how the usual criteria employed by international organizations to determine a country’s development standing have become increasingly difficult to apply to China, given the dramatic changes it has undergone over the past several decades, notably from an energy perspective. The paper finds that China combines significant characteristics of both developing and developed countries and examines the energy and environmental implications of this hybrid status.
  • Topic: Climate Change, Development, Energy Policy, Environment
  • Political Geography: China, Asia
  • Author: Jason Bordoff
  • Publication Date: 07-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: In the U.S. Democratic Party, perhaps no issue has risen more in prominence during this election year compared with prior ones than climate change. The number of self-identified Democrats who consider it a “major threat” is up from 6 in 10 in 2013 to almost 9 in 10 today. A slew of proposals—from the Green New Deal embraced by many progressive environmental groups to a new 538-page climate plan released by Democratic members of a special committee on the climate crisis in the U.S. House of Representatives—lay out various policies. Yet while these plans offer much to celebrate, all of them fall short by focusing on domestic actions while paying scant attention to the global nature of the crisis. Every ton of carbon dioxide contributes to climate change no matter where it is emitted, so an ambitious climate strategy cannot only be domestic—it must put the issue squarely at the center of U.S. foreign policy. Past U.S. efforts to advance global action, such as Washington’s leadership to help secure the 2015 Paris climate agreement, have been key to progress. Yet given both the urgency and global nature of climate change, the issue cannot be siloed into U.S. State Department or Energy Department offices and spheres of diplomacy. Many aspects of U.S. foreign policy will impact, and be impacted by, climate change. An effective foreign policy requires taking climate change directly into consideration—not just as a problem to resolve, but as an issue that can affect the success and failure of strategies in areas as varied as counterterrorism, migration, international economics, and maritime security. Human rights offers some important lessons. In the wake of the Vietnam War and the United States’ secret bombings of Cambodia, public concern for human rights was on the rise. Upon taking office in 1977, President Jimmy Carter declared human rights to be a “central concern” of U.S. foreign policy. In contrast to the realpolitik promoted by outgoing Secretary of State Henry Kissinger, Carter argued that protecting human rights would advance U.S. interests and was too important to be divorced from other aspects of U.S. foreign policy. Rather, human rights must be “woven into the fabric of our foreign policy,” as then Deputy Secretary of State Warren Christopher testified before a Senate subcommittee. Despite Carter’s mixed foreign-policy success, climate change demands a similar centrality. As the defining challenge of our time, climate change must be elevated to a foreign-policy priority and cannot be addressed with a compartmentalized approach. It is necessary, of course, to rejoin the Paris agreement, contribute to international finance efforts such as the Green Climate Fund, curb multilateral coal financing, and collaborate with other countries on clean-energy innovation. Yet all these efforts add up to an international climate strategy, not a climate-centered foreign policy. Truly making climate change a pillar of a foreign-policy strategy would have five key elements.
  • Topic: Climate Change, Energy Policy, Environment, International Cooperation, Paris Agreement
  • Political Geography: North America, United States of America
  • Author: Jonathan Elkind, Damian Bednarz
  • Publication Date: 07-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Prospects for the proposed European Green Deal—a top European Union (EU) priority despite the headwinds from the global pandemic—require accommodating both the “climate ambitious” policy makers in Brussels, Berlin, and several other EU capitals and the “climate cautious” leaders in Warsaw and other Eastern European capitals. With the European Council’s announcement of an agreed package on July 21, 2020, a tricky step remains: ratification by the European Parliament and national legislatures. If lawmakers support the Council’s package, this impressive feat of deal-making will yield important outcomes
  • Topic: Climate Change, Energy Policy, Environment, Regional Cooperation, Science and Technology, European Union, Green Technology, Green New Deal
  • Political Geography: Europe
  • Author: David B. Sandalow, Xu Qinhua
  • Publication Date: 08-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: On June 14, 2020 New York time and June 15, 2020 Beijing time, the Center on Global Energy Policy at Columbia University and Center for International Energy and Environment Strategy Studies at Renmin University convened a joint Zoom workshop on green stimulus programs in the US and China. The workshop offered a chance for scholars from the two universities to explore the recent economic downturn due to the COVID-19 pandemic, stimulus measures adopted to date and green stimulus proposals in both countries. Participants also discussed other measures to promote clean energy and low-carbon development in the US and China.
  • Topic: Climate Change, Energy Policy, Environment, Green Technology, Paris Agreement
  • Political Geography: China, Asia, North America, United States of America
  • Author: Noah Kaufman, Peter Marsters, Alexander R. Barron, Wojciech Krawczyk, Haewon McJeon
  • Publication Date: 08-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: The social cost of carbon (SCC) is commonly described and used as the optimal CO2 price. However, the wide range of SCC estimates provides limited practical assistance to policymakers setting specific CO2 prices. Here we describe an alternate near-term to net zero (NT2NZ) approach, estimating CO2 prices needed in the near term for consistency with a net-zero CO2 emissions target. This approach dovetails with the emissions-target-focused approach that frames climate policy discussions around the world, avoids uncertainties in estimates of climate damages and long-term decarbonization costs, offers transparency about sensitivities and enables the consideration of CO2 prices alongside a portfolio of policies. We estimate illustrative NT2NZ CO2 prices for the United States; for a 2050 net-zero CO2 emission target, prices are US$34 to US$64 per metric ton in 2025 and US$77 to US$124 in 2030. These results are most influenced by assumptions about complementary policies and oil prices.
  • Topic: Climate Change, Energy Policy, Environment, Natural Resources, Carbon Emissions
  • Political Geography: Global Focus
  • Author: Julio Friedmann, Alex Zapantis, Brad Page, Chris Consoli, Zhiyuan Fan, Ian Havercroft, Harry Liu, Emeka Richard Ochu, Nabeela Raji, Dominic Rassool, Hadia Sheerazi, Alex Townsend
  • Publication Date: 09-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: The case for rapid and profound decarbonization has never been more obvious or more urgent, and immediate action must match growing global ambition and need. An important new component of this discussion is the necessity of achieving net-zero global greenhouse gas emissions for any climate stabilization target. Until net-zero emissions are achieved, greenhouse gas will accumulate in the atmosphere and oceans, and concentrations will grow, even with deep and profound emissions reduction, mitigation, and adaptation measures. This places a severe constraint on human enterprise: any carbon removed from the earth must be returned to the earth.
  • Topic: Climate Change, Environment, Green Technology, Carbon Emissions, Decarbonization
  • Political Geography: Global Focus
  • Author: Noah Kaufman, Yu Ann Tan
  • Publication Date: 10-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Regulations of greenhouse gas emissions, which are global pollutants, should ideally be coordinated across broad geographic and economic scopes. That way, climate policies can capture important interactions across sectors and borders. However, the United States has repeatedly failed to implement national and economywide climate legislation. That failure has led to an increasing focus on climate actions that are much narrower in scope: sector-specific regulations from subnational governments. A prominent recent example is New York City’s Local Law 97, which limits carbon dioxide (CO2) emissions from a large segment of the city’s residential and commercial buildings. This law is among the most ambitious building emissions regulations in the world, but this commentary focuses on a concern with the design of Local Law 97. The law does not account for the planned decarbonization of the local electricity grid over the next decade, and thus fails to sufficiently encourage a shift from fossil fuels to electricity (or “electrification”), a critically important strategy for achieving a low-carbon building sector. Such a narrow focus is common for sector-specific climate regulations. The following sections explain the importance of electrification to deep decarbonization and the failure of building regulations to encourage it, focusing on New York City’s Local Law 97. Fortunately, solutions to the overly narrow focus of the New York City buildings law are readily available, including via New York State’s comprehensive climate strategy, which can align climate action across economic sectors within the state.
  • Topic: Climate Change, Energy Policy, Environment, Law, Green Technology, Carbon Emissions
  • Political Geography: New York, North America, United States of America
  • Author: Jonathan Elkind, Erin Blanton, Robert Kleinberg, Anton Leemhuis
  • Publication Date: 10-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: In August 2020, the Trump Administration finalized plans to roll back regulations on oil and gas industry emissions of methane from new and modified infrastructure. In the same month, the European Commission gathered stakeholder comments as part of its process to introduce the first EU-wide methane regulations. Though contradictory in direction, these regulatory processes on opposite sides of the Atlantic highlighted a critical climate protection challenge: How can the oil and gas industry—and the regulators who oversee it—best detect and address methane emissions to protect the environment and the climate in particular? The answer to this question will drive planning and operational approaches in the oil and gas industry. It could also significantly affect the future role of natural gas. Five years ago, many energy analysts expected natural gas to serve as a bridge fuel that would result in only half as much climate warming as coal, and fewer local air pollutants. Among other roles, gas was seen as a natural complement for variable wind or solar power—a way to provide firm, dispatchable, low-emissions power. Now that it is apparent that our understanding of methane emissions is poor, the climate implications of gas are far less clear. This poor grasp of methane emissions appears likely to become a thing of the past, however. In roughly the next five years, new satellite detection systems—used in concert with existing systems, aerial monitoring platforms, and ground-based monitors—can increase markedly the transparency surrounding methane leakage. The new wave of satellite monitoring capability has major implications for industry and governments. Our world is rapidly becoming a place in which methane emissions will have nowhere to hide. This commentary, co-authored by the Center on Global Energy Policy and TNO, focuses on detection and response to oil- and gas-related methane emissions, which have been the subject of increasing focus on the part of industry and the public policy community. It addresses the significance of methane emissions for the climate, and the challenges of detecting and accurately quantifying methane emissions. It then explores the evolving capabilities of satellite-based methane detection and monitoring systems, which are expected to advance rapidly in the coming years, and which can be especially powerful when used in concert with aerial and ground-based monitoring systems. It concludes with a discussion of the implications of the changing satellite detection landscape for the oil and gas industry, the finance and investment community, and the realm of public policy.
  • Topic: Climate Change, Energy Policy, Environment, Gas, Finance, Methane
  • Political Geography: Global Focus
  • Author: John Larsen
  • Publication Date: 10-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Putting a price on carbon dioxide (CO2) emissions can help governments reduce them rapidly and in a cost-effective manner. While 10 carbon tax bills have been proposed in the 116th US Congress, carbon prices alone are not enough to reach net-zero emissions by midcentury. Additional policies are needed to complement an economy-wide carbon tax and further cut CO2 from the US energy system. This study aims to provide a better understanding of such policy combinations. It projects the energy CO2 emissions impacts of two carbon taxes, starting in 2021, that span the rates in the carbon tax bills in Congress. The “low” tax scenario starts at $30 per ton in 2021 and rises at 5 percent plus inflation per year, reaching $44 by 2030, while the “high” carbon tax starts at $15 per ton and rises $15 per year, reaching $150 by 2030. The paper then describes the barriers inhibiting emissions reductions beyond those achieved by the carbon taxes alone for each major sector: electricity, transportation, buildings, and industry. Finally, it explores the energy system changes needed to overcome those barriers and the policy interventions that could deliver those changes. For certain key energy system changes, it provides quantitative estimates of emissions reductions incremental to the two carbon taxes. This paper is part of a joint effort by Columbia University’s Center on Global Energy Policy (CGEP) and Rhodium Group to help policy makers and other stakeholders understand the important decisions associated with the design of carbon pricing policies and the implications of these decisions. The paper finds the emissions impacts of the low and high carbon taxes alone lead to economy-wide energy CO2 emissions reductions by 2030 of 33 percent and 41 percent, respectively, below 2005 levels. A carbon tax combined with policy actions that support comprehensive, ambitious energy system changes could lead to emissions reductions in the range of 40 to 45 percent, arguably consistent with US midcentury deep decarbonization goals for the energy system. In the 2020s, the bulk of these emissions reductions are likely to occur in the power sector, even under a broad decarbonization strategy, due to the significant barriers to large near-term emissions reductions in the transportation, buildings, and industrial sectors.
  • Topic: Climate Change, Energy Policy, Environment, Carbon Tax, Carbon Emissions
  • Political Geography: Global Focus
  • Publication Date: 10-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: On July 2, 2020, Columbia University’s Center on Global Energy Policy (CGEP) and Harvard University jointly hosted a virtual roundtable on climate-oriented economic recovery and stimulus packages. Stakeholders included senior experts from universities and policy institutes as well as former high-level government officials. Key questions discussed at the roundtable, held under the Chatham House Rule, included the following: What are the appropriate objectives of economic stimulus and recovery packages? What clean energy lessons from the 2009 American Reinvestment and Recovery Act are most relevant to the design of economic stimulus legislation today? What climate and energy policies are best suited to deliver on both economic stimulus and climate objectives? How does near-term climate-oriented stimulus complement medium-term climate policy and yield progress on long-term climate goals? The following is an overview of the discussion.
  • Topic: Climate Change, Energy Policy, Environment, Economic Recovery
  • Political Geography: North America, United States of America
  • Author: Philippe Benoit, Alex Clark
  • Publication Date: 11-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: On February 27, 2020, the Columbia University Center on Global Energy Policy (CGEP) convened a workshop at the university’s Faculty House in New York City. The workshop brought together a combination of practitioners, researchers, executives, and public sector officials to discuss the role of state-owned enterprises (SOEs) in realizing collective climate action goals. Under the Chatham House Rule, the discussion focused around sectors (power generation, oil and gas) and relationships (government-SOE relations, and the role of public financial institutions), before concluding with a roundtable discussion drawing together the day’s proceedings and outlining the next steps. The following is a summary of that workshop.
  • Topic: Climate Change, Energy Policy, Natural Resources, Governance
  • Political Geography: Global Focus
  • Author: Aimee Barnes, Fan Dai, Angela Luh
  • Publication Date: 12-2020
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Averting global climate catastrophe depends in large part on progress by the world’s two greatest powers and emitters: the United States and China. However, relations between these two countries—particularly on climate action—have deteriorated over the past four years. With a new presidential administration set to enter the White House in January 2021, there is an opportunity for the US and China to build trust and cooperation on climate change in a way that supports a cooperative and dynamic bilateral relationship more broadly. This commentary takes a close look at the Biden-Harris presidential platform with respect to climate action and China, and assesses China’s domestic and international climate efforts, particularly with respect to the status of its 14th Five-Year Plan. Importantly, what emerges from this examination is a starting point for China and the US to improve their relationship through climate action and collaboration. China’s announcement that it would seek to achieve carbon neutrality by 2060 is an important step towards such cooperation.[1] The most promising potential areas for US-China cooperation fall into three broad categories: renewing a shared commitment to global climate governance under the Paris Agreement; building trust to enable renewed bilateral cooperation, such as on technology innovation and investments; and supporting subnational leaders' progress in both countries through platforms where they can productively convene. Recognizing that a climate-safe future is bound up in our mutuality, these two world powers can promote a new era of climate action and resiliency.
  • Topic: Climate Change, Diplomacy, Energy Policy, Environment, International Cooperation
  • Political Geography: China, Asia, North America, United States of America
  • Author: Justin Gundlach, Ron Minsk, Noah Kaufman
  • Publication Date: 03-2019
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Putting a price on carbon is a critical part of a low-cost strategy for reducing greenhouse gas (GHG) emissions, and a national carbon tax is a rare example of a climate change policy that has found bipartisan support in the United States. In 2018, legislation establishing a carbon tax was proposed by Democrats, Republicans, and bipartisan groups of US congressmen. However, while passing a carbon tax would certainly prove a significant step toward slashing emissions, simply adding a carbon tax to current policies is unlikely to achieve an emissions target at the lowest cost. Designing a carbon tax that contributes to achieving greenhouse gas reduction targets effectively and efficiently will require an examination of whether other new policies are also needed and whether existing policies can or should be changed or eliminated. With more proposals expected in 2019, such an examination is critical to ensuring both sufficient emissions reductions and an efficient set of policies that keep costs in check for taxpayers. As part of a broader carbon tax research program at the School of International and Public Affairs Center on Global Energy Policy at Columbia University, we have developed a framework for considering the interactions between a federal carbon tax and other policies that influence greenhouse gas emissions. Toward the goal of helping to design better policies, we identify policies and programs that are “complementary” to a carbon tax or “redundant.” A policy is defined as complementary if it: enables more cost-effective reductions of carbon dioxide emissions than a carbon tax would achieve on its own; or reduces GHG emissions and achieves a separate policy objective more cost-effectively than a federal carbon tax would on its own. Conversely, a policy is defined as redundant with a federal carbon tax if it leads to additional costs to society without achieving additional emissions reduction. In developing this framework, we recognize that real-world policies often do not fall cleanly into either category and that neither specifying the framework nor making the categorizations is an exact science. It is often difficult to identify a policy’s objective or evaluate its cost-effectiveness. In addition, the extent to which a policy complements a carbon tax depends on the nature of the carbon tax. Most obviously, with a lower carbon tax rate, fewer emission reductions would be achieved, and additional policies may be needed to make up the difference between the outcome and a science-based emissions reduction target. The results of the work, highlighted in the following table, indicate a relatively large number of policies can complement a carbon tax, such as those that support innovation in low-carbon technologies, tackle behavioral barriers to more efficient energy use, or improve public infrastructure and address barriers to reducing emissions unrelated to the price-related barriers addressed by a carbon tax. Conversely, the paper identifies regulations that force entities that pay the carbon tax to take specific actions to reduce their emissions, such as Environmental Protection Agency regulations of stationary sources of carbon dioxide emissions under section 111 of the Clean Air Act, as redundant with the carbon tax. The paper does not recommend which policies should be eliminated, changed, or added but intends to provide policy makers with information that will help them make these decisions.
  • Topic: Climate Change, Science and Technology, Green Technology, Carbon Tax
  • Political Geography: United States
  • Author: Adele Morris, Noah Kaufman, Siddhi Doshi
  • Publication Date: 07-2019
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: If the United States undertakes actions to address the risks of climate change, the use of coal in the power sector will decline rapidly. This presents major risks to the 53,000 US workers employed by the industry and their communities. 26 US counties are classified as “coal-mining dependent,” meaning the coal industry is a major employer. In these areas, the industry is also an important contributor to local government finances through a complex system of property, severance, sales, and income taxes; royalties and lease bonuses for production on state and federal lands; and intergovernmental transfers. While climate-related risks to corporations have received scrutiny in recent years, local governments—including coal-reliant counties—have yet to grapple with the implications of climate policies for their financial conditions. Importantly, the risks from the financial decline of coal-reliant counties extend beyond their borders, as these counties also have significant outstanding debts to the US municipal bond market that they may struggle to repay. To be sure, national climate policy in the United States is uncertain. Experts have long recommended strong policy action to reduce emissions, and for years, policy makers have largely ignored their advice. Nevertheless, with growing support by the public and policy makers, meaningful climate policy in the United States may be on the horizon, and those dependent on coal should be looking ahead to manage their risks. This paper examines the implications of a carbon-constrained future on coal-dependent local governments in the United States. It considers the outlook for US coal production over the next decade under such conditions and explores the risk this will pose for county finances. The paper also considers the responsibilities of jurisdictions to disclose these risks, particularly when they issue bonds, and the actions leaders can take to mitigate the risks. In short, the paper finds the following: ● Coal production in the United States fell by one-third between 2007 and 2017. Projections of the US energy system show this decline continuing gradually under current policies. However, even a moderately stringent climate policy could create existential risks for the coal industry, with potential declines in production of around 75 percent in the 2020s. ● A careful look at three illustrative counties shows that coal-related revenue may fund a third or more of their budgets. The exposure is compounded because school districts and other special districts within the counties also receive coal-dependent revenue. The complex system of local revenue instruments and intergovernmental transfers plus a lack of sufficiently detailed budget data makes it difficult to parse out just how reliant jurisdictions are on the coal industry. ● Estimates of the direct linkages between the coal industry and county budgets will almost certainly understate the risks because lost economic activity and jobs will have ripple effects across the economy. Case studies show that the rapid decline of a dominant industry has led to downward spirals and eventual collapses of local governments’ fiscal conditions, including the inability to raise revenue, repay debt, and/ or provide basic public services. ● Coal-dependent communities have a variety of outstanding bonds, and the risk of collapse of the coal industry threatens their ability to repay them. Despite regulations requiring disclosures to reflect risks to the financial health of municipalities, our review of the outstanding bonds indicates that municipalities are at best uneven and at worst misleading (by omission) in their characterizations of climate-related risks. Ratings reports are not much better than official statements in describing the risks associated with the exposure of some local governments to the coal industry. ● Climate policies can be combined with investments in coal-dependent communities to support their financial health. A logical source of funding for such investments would be the revenues from a price on carbon dioxide emissions, a necessary element of any cost-effective strategy for addressing the risks of climate change. A small fraction of revenue from a federal carbon price in the United States could fund billions of dollars in annual investments in the economic development of coal-dependent communities and direct assistance to coal industry workers. ● In considering reforms, several questions emerge for stakeholders. These include whether regulators should develop additional requirements for the disclosure of risks from future climate policies; whether ratings agencies should increase attention to the risks to local governments of climate policies; and whether stakeholders in the municipal bond market, such as borrowers, insurers, and underwriters, are appropriately accounting for risks to the coal industry.
  • Topic: Climate Change, Energy Policy, Coal, Domestic Policy
  • Political Geography: United States
  • Author: John Macwilliams, Sarah Lamonaca, James Kobus
  • Publication Date: 08-2019
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: The Pacific Gas and Electric (PG&E) bankruptcy, which was caused by liabilities resulting from massive wildfires, has widely been called the first climate change bankruptcy. It will likely not be the last, as climate change exacerbates natural disasters, leading to more frequent and intense wildfires, storms, and flooding. Wildfires alone could become up to 900 percent more destructive in certain regions by midcentury, and utility assets will also be increasingly exposed to threats stemming from hurricanes, rising sea levels, and other climate-related events. These extreme weather events will increase costs to utility-sector stakeholders, including investor-owned utilities, state and local governments, ratepayers, and taxpayers. These risks could place financial stress on utility companies, drive up electricity rates, crowd out essential investment in renewable energy and grid upgrades, and disrupt service. In this paper, Columbia University’s Center on Global Energy Policy reviews and analyzes the PG&E bankruptcy, assesses how capital markets have reacted to the bankruptcy through the lens of valuations in the US utility sector, and discusses policy implications of California’s recent legislative response to wildfire risk. This paper examines market indicators to assess investor expectations of climate risk exposure and likely cost allocation. Neither debt nor equity markets suggest widespread concern about climate risk in the utility sector. In the absence of strong market signals to encourage climate risk mitigation, the authors find that policy frameworks are needed to ensure that companies make necessary preventative investments and to define how costs will be allocated among stakeholders. This paper also reviews a recently passed California bill aimed at achieving these objectives and the lessons and best practices it offers for other policy makers. In short, the paper finds the following: Market indicators suggest that the California wildfires and subsequent PG&E bankruptcy have not caused imminent concern about climate risks in the utility sector. Equity valuations for the sector remain strong, with a utility stock index trading at a higher-than-average premium to the market benchmark. In credit markets, regulated utilities in the United States have raised more than $50 billion of corporate debt in 2019 to date, and borrowing spreads are currently below historical averages. There are several reasons why markets may not reflect widespread climate risk to utilities, despite the scientific evidence around likely future damage. Investors may believe that cost increases from climate change will occur too far in the future to materially impact the present value of their investments. Even if investors believe that climate change risks are material to valuation, they may also believe that such risks will not be considered by other investors for some time. Investors may be viewing wildfires as a California-specific risk, though the regional skew of wildfires is likely to shift significantly in coming years. They may lack the information or modeling tools for assessing the likelihood and geographic dispersion of high-impact tail events, such as the wildfires that PG&E faced. Financial markets may also reflect the belief that the costs of climate change in the utility sector will fall predominantly on ratepayers, insurance companies, and/or taxpayers rather than investors, and therefore investors may not view themselves as materially exposed. California’s recent creation of a wildfire insurance fund with contributions from both ratepayers and companies provides important policy lessons for designing comprehensive frameworks to allocate climate damage costs. These include the strengthening of both regulatory and corporate climate resilience expertise, mandating preventative investment as a prerequisite for cost-recovery mechanisms, defining utility financial exposure for climate damage situations, and providing cash for utilities to provide essential services when facing large disasters. The policy also presents some potential pitfalls that may be instructive for other state policy makers. The legislation sets aside large reserves for future damage, a necessary measure, but one that will result in higher electric bills. The bill does not allow utilities to earn a return on safety-related spending, which broadly diminishes incentives for proactive climate mitigation investment. The potential insufficiency of the wildfire fund also creates uncertainty about future cost allocation. Finally, failing to reform the California legal framework that allows utilities to be held liable for damages they did not cause perpetuates risks for companies and ratepayers. If the first climate change bankruptcy is indicative of a new reality, it is not that utilities are going to go bankrupt overnight. Rather, climate disasters will increasingly add financial stress to utility-sector stakeholders, as costs accumulate from both acute events and damaging extreme weather impacts. Adapting the regulatory bargain for a climate-exposed future will require lawmakers, regulators, and shareholders to develop new approaches and new incentive structures to ensure an accountable, robust utility sector. Moreover, while climate change is already presenting real financial challenges to utilities, it will not be the only sector to face large climate-driven costs. Other corporate actors can look to the utility experience to better understand how policy makers, investors, and companies will respond to the growing financial threat from climate change.
  • Topic: Climate Change, Economics, Gas, Electricity
  • Political Geography: United States, California
  • Author: Philippe Benoit
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Policy makers, academics, and others have devoted significant effort over the past three decades to considering how best to incentivize households and private companies to reduce their greenhouse gas (GHG) emissions. There has been much less discussion about how best to incentivize state-owned enterprises (SOEs) -- companies that are either wholly or majority owned by a government -- to cut emissions. Yet when it comes to energy sector GHGs, these state companies are among the world’s leading emitters. They are major emitters at both the country and global levels, notably from electricity generation. In the aggregate, they emit over 6.2 gigatonnes of carbon dioxide equivalent per year in energy sector GHGs, which is more than every country except China. Public sector companies are also major providers of low-carbon alternatives, such as renewables and nuclear power, and importantly, they often operate under incentives that are quite different from those facing their private sector counterparts. Given the emissions profile of SOEs, the nature of their corporate mandates, and their ownership structure, Columbia University’s Center on Global Energy Policy undertook research to examine how best to engage these companies in efforts to lower greenhouse gas emissions as part of its ongoing work on climate change. The paper explores the role of these public sector companies in climate change, examines the effectiveness of market-oriented solutions such as carbon taxes in changing SOE behavior, and evaluates some other potential strategies for reducing their emissions. In short, the paper finds the following: The state-ownership structure of SOEs allows governments to exercise shareholder power to press for the implementation of their climate policy preferences. Providing public sector financing and making associated infrastructure improvements are other ways that a government can encourage its SOEs to invest in low-carbon alternatives. In contrast, many SOEs operate with nonfinancial mandates, market protections, and other conditions that limit their responsiveness to carbon pricing mechanisms that are effective in changing private sector behavior. There are other ways to alter public sector companies so that they embrace a greener pathway without being directed, especially if a firm’s management determines the pathway will serve its corporate interests. This can be especially important for state-owned companies that have the political weight to resist government climate policy pressures. In emerging economies with large SOE emissions and with governments willingly direct their SOEs, using these companies to reduce emissions is a policy tactic that can present implementation and other advantages because it requires the government to target a limited number of companies that the state already owns and controls. How much a government prioritizes climate change relative to other goals is the most critical factor that will determine the extent to which its SOEs prioritize low-carbon investments. Successfully merging climate goals into growth objectives, at both the broader economic and the SOE-company levels, increases the likelihood that a state company will engage in the low-carbon transition in a sustained manner.
  • Topic: Climate Change, Energy Policy, Science and Technology, Green Technology
  • Political Geography: Global Focus
  • Author: David Sandlow
  • Publication Date: 09-2019
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: In 2018, China was the world’s leading emitter of heat-trapping gases by a wide margin. Its policies for limiting emissions will have a significant impact on the global climate for decades to come. From a historical perspective, China’s status as the world’s leading emitter is relatively recent. During most of the 19th and 20th centuries, Chinese emissions were modest. Then, in the early part of this century, as the Chinese economy boomed, Chinese emissions began to skyrocket, overtaking those from the United States around 2006. China’s cumulative emissions of carbon dioxide since the beginning of the Industrial Revolution are roughly half those from the United States. (Carbon dioxide, the leading heat-trapping gas, stays in the atmosphere for many years once emitted.) China’s leaders have declared that the impacts of climate change “pose a huge challenge to the survival and development of the human race” and that China is “one of the most vulnerable countries to the adverse impacts of climate change.”[11] The Chinese government has adopted short- and medium-term goals for limiting emissions of heat-trapping gases and a wide-ranging set of policies that contribute to meeting those goals. Those policies are shaped in part by other objectives, including promoting economic growth, cutting local air pollution and developing strategic industries. This Guide examines Chinese climate change policies. It starts with a review of Chinese emissions. It then explores the impacts of climate change in China and provides a short history of the country’s climate policies. The bulk of the Guide discusses China’s principal climate policies, explaining the policy tools the Chinese government uses to address climate change and related topics. Appendices provide background on institutions that shape climate policy in China. What are “climate policies”? Monetary and fiscal policies affect emissions and could therefore qualify, as could policies on many other topics. This Guide does not catalog all policies that could affect emissions or the climate, but instead focuses on policies most directly related to climate change, including those on energy, transportation, urbanization, forestry, climate adaptation and climate diplomacy. In choosing policies to focus on, I am guided in part by international convention and in part by governments’ extensive reporting on this topic. The Intended Nationally Determined Contributions submitted by more than 160 nations to the UN Framework Convention on Climate Change show a broad international consensus that policies on energy, transportation, urbanization and forestry, among others, are considered “climate policies.” The Chinese government’s official documents on climate change show the same.[12] Several official documents are important resources for anyone interested in China’s climate policies. Every year the National Development and Reform Commission (NDRC) publishes a report on China’s Policies and Actions for Addressing Climate Change.[13] These reports provide detailed information on a range of topics. Other key sources for understanding China’s climate policies include: China’s Intended Nationally Determined Contributions, submitted to the UN Framework Convention on Climate Change in June 2015;[14] Work Plan for Controlling Greenhouse Gas Emissions in the 13th Five-Year Plan, issued by the State Council in October 2016;[15] China’s First Biennial Update Report on Climate Change, submitted to the UN Framework Convention on Climate Change in December 2016;[16] China’s Second Biennial Update Report on Climate Change, submitted to the UN Framework Convention on Climate Change in December 2018;[17] and China’s Third National Communication on Climate Change, submitted to the UN Framework Convention on Climate Change in December 2018[18] Several themes run through these documents, including strong commitments to low-carbon development, cutting coal use, scaling up clean energy sources, promoting sustainable urbanization and participating actively in climate diplomacy. Implementation is fundamental to any policy. This is especially true in China, where policy implementation can be a considerable challenge. Key ministries may fail to coordinate. Resources for enforcement may be lacking. Policies designed to achieve different objectives may conflict. The priorities of provincial leaders may not align with policies from Beijing. For these reasons and more, stated policies—while important—are just part of the picture when it comes to understanding the Chinese response to climate change. The organization of this Guide reflects that. Most chapters start with a section of background facts. This background provides context and can help in forming judgments on the impacts of policies to date and potential impacts of policies in the years ahead. Where implementation has been especially challenging or successful, that is highlighted. This Guide can be read in parts or as a whole. Individual chapters are designed to stand alone and provide readers with information on discrete topics. The Guide as a whole is designed to provide an understanding of China’s response to climate change and the implications of that response for China and the world. The Guide can be accessed in three ways: by purchasing it as a book on Amazon.com by visiting the Guide to Chinese Climate Policy website at https://chineseclimatepolicy.energypolicy.columbia.edu/, and by downloading it for free from the website above or the website of Columbia University’s Center on Global Energy Policy—http://energypolicy.columbia.edu/ This is a “living document.” Many of the facts and policies it describes will change in the months and years ahead. As that happens, this Guide will be updated. New editions of the Guide will be released regularly.
  • Topic: Climate Change, Energy Policy, Science and Technology, Green Technology
  • Political Geography: China, Asia
  • Author: Julio Friedman
  • Publication Date: 10-2019
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Recent studies indicate there is an urgent need to dramatically reduce the greenhouse gas emissions from heavy industrial applications (including cement, steel, petrochemicals, glass and ceramics, and refining). Heavy industry produces roughly 22 percent of global CO₂ emissions. Of these, roughly 40 percent (about 10 percent of total emissions) is the direct consequence of combustion to produce high-quality heat, almost entirely from the combustion of fossil fuels. This is chiefly because these fuels are relatively cheap, are widely available in large volumes, and produce high-temperature heat in great amounts. Many industrial processes require very large amounts of thermal energy at very high temperatures (more than 300°C and often more than 800°C). For example, conventional steel blast furnaces operate at about 1,100°C, and conventional cement kilns operate at about 1,400°C. In addition, many commercial industrial facilities require continuous operation or operation on demand. The nature of industrial markets creates challenges to the decarbonization of industrial heat. In some cases (e.g., steel, petrochemicals), global commodity markets govern product trade and price. Individual national action on the decarbonization of heavy industry can lead to trade disadvantage, which can be made acute for foundational domestic industries (in some cases, with national security implications). This can also lead to offshoring of production and assets, leading to carbon “leakage” as well as local job and revenue loss (with political consequences). In many cases, lack of options could lead to dramatic price increases for essential products (e.g., cement for concrete, an essential building material). Risk of carbon leakage, price escalation, and trade complexity limits the range of policy applications available to address this decarbonization need. To explore the topic of industrial heat decarbonization, the authors undertook an initial review of all options to supply high temperature, high flux, and high volume heat for a subset of major industrial applications: cement manufacturing, primary iron and steel production, methanol and ammonia synthesis, and glassmaking. From the initial comprehensive set of potential heat supply options, the authors selected a subset of high relevance and common consideration: Biomass and biofuel combustion Hydrogen combustion (including hydrogen produced from natural gas with 89 percent carbon capture (blue hydrogen) and hydrogen produced from electrolysis of water using renewable power (green hydrogen) Electrical heating (including electrical resistance heating and radiative heating (e.g., microwaves) Nuclear heat production (including conventional and advanced systems) The application of post-combustion carbon capture, use, and storage (CCUS) to industrial heat supply and to the entire facility, as a basis for comparison The authors focus on substitutions and retrofits to existing facilities and on four primary concerns: cost, availability, viability of retrofit/substitution, and life-cycle footprint. In short, the paper finds: All approaches have substantial limitations or challenges to commercial deployment. Some processes (e.g., steelmaking) will likely have difficulty accepting options for substitution. All options would substantially increase the production cost and wholesale price of industrial products. For many options (e.g., biomass or electrification), the life-cycle carbon footprint or efficiency of heat deposition are highly uncertain and cannot be resolved simply. This complicates crafting sound policy and assessing technical options and viability. Most substitute supply options for low-carbon heat appear more technically challenging and expensive than retrofits for CCUS. Even given the uncertainties around costs and documented complexities in applying CO₂ capture to industrial systems, it may prove simpler and cheaper to capture and store CO₂. CCUS would have the added benefit of capturing emissions from by-product industrial chemistry, which can represent 20–50 percent of facility emissions and would not be captured through heat substitution alone. Critically, CCUS is actionable today, providing additional GHG mitigation to industrial heat and process emissions as other options mature and become economically viable. Hydrogen combustion provided the readiest source of heat of all the options assessed, was the simplest to apply (including retrofit), and was the most tractable life-cycle basis. Today, hydrogen produced from reforming natural gas and decarbonized with CCUS (blue hydrogen) has the best cost profile for most applications and the most mature supply chain, and it would commonly add 10–50 percent to wholesale production costs. It also could provide a pathway to increase substitution with hydrogen produced by electrolysis of water from carbon-free electricity (green hydrogen), which today would increase costs 200–800 percent but would drop as low-carbon power supplies grow and electrolyzer costs drop. Hydrogen-based industrial heat provides an actionable pathway to start industrial decarbonization at once, particularly in the petrochemical, refining, and glass sectors, while over time reducing cost and contribution of fossil sources. However, substitution of hydrogen will prove more difficult or infeasible for steel and cement, which might require more comprehensive redesign and investment. Most of the other options appear to add substantially to final production costs—commonly twice that of blue hydrogen substitution or CCUS—and are more difficult to implement. However, all options show the potential for substantial cost reductions. An innovation agenda remains a central important undertaking and likely would yield near-term benefits in cost reduction, ease of implementation, and a lower life-cycle carbon footprint. Prior lack of focus on industrial heat supplies as a topic leave open many possibilities for improvement, and dedicated research, development, and demonstration (RD&D) programs could make substantial near-term progress. To avoid commercial and technical failure, government innovation programs should work closely with industry leaders at all levels of investigation. New policies specific to heavy industry heat and decarbonization are required to stimulate market adoption. Policies must address concerns about leakage and global commodity trade effects as well as the environmental consequences. These policies could include sets of incentives (e.g., government procurement mandates, tax credits, feed-in tariffs) large enough to overcome the trade and cost concerns. Alternatively, policies like border adjustment tariffs would help protect against leakage or trade impacts. Because all options suffer from multiple challenges or deficiencies, innovation policy (including programs that both create additional options and improve existing options) is essential to deliver rapid progress in industrial heat decarbonization and requires new programs and funding. As a complement to innovation policy and governance, more work is needed to gather and share fundamental technical and economic data around industrial heat sources, efficiency, use, and footprint.
  • Topic: Climate Change, Energy Policy, Infrastructure, Green Technology
  • Political Geography: Global Focus
  • Author: Noah Kaufman, John Larsen, Peter Marsters, Hannah Kolus, Shashank Mohan
  • Publication Date: 11-2019
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Growing public concern about the social, economic, and environmental impacts of climate change, along with pressure for lawmakers to introduce policy proposals that reduce emissions, have brought carbon taxes to the center of policy discussions on Capitol Hill. Thus far in 2019, seven different carbon tax legislative proposals have been introduced in Congress. The proposal with the most cosponsors, totaling 64 Democrats and 1 Republican as of the end of September 2019, is the Energy Innovation and Carbon Dividend Act (EICDA), introduced in February 2019 by lead sponsor Ted Deutch (D-FL). This study assesses the potential impacts of EICDA on the US energy system, environment, and economy. EICDA establishes a fee on each ton of greenhouse gas (GHG) emissions. It covers over 80 percent of gross national emissions. The fee starts at $15 per metric ton and increases by $10 or $15 each year, depending on future emissions levels. Revenue raised by the carbon fee is used for “carbon dividends,” a rebate to every eligible US citizen or lawful resident. The bill also includes measures to protect US competitiveness and to reduce the risk that companies will relocate their operations to a different country with laxer climate laws. Through the carbon fee and additional regulations if necessary, EICDA targets 90 percent emissions reductions by 2050 compared to 2016 levels. This study is part of a joint effort by Columbia University’s Center on Global Energy Policy (CGEP) and Rhodium Group to help policymakers, journalists, and other stakeholders understand the important decisions associated with the design of carbon tax policies and the implications of these decisions. This analysis uses a version of the National Energy Modeling System maintained by the Rhodium Group (RHG-NEMS) to quantify the energy and environmental implications of EICDA, focusing on outcomes through 2030. Supplemental analyses provide insights on how EICDA would affect households, the economy, and government budgets. The following are key results: GHG emissions decline substantially. Compared to 2005 levels, implementing EICDA as a stand-alone policy leads to economy-wide net GHG emissions reductions of 32–33 percent by 2025 and 36–38 percent by 2030. These emissions reductions exceed the targets in the EICDA proposal through 2030 and exceed the US commitments to the Paris Agreement over this period. Most of the near-term emission reductions occur in the power sector, where emissions fall 82–84 percent by 2030. Air pollution also declines. EICDA reduces local air pollution from power plants. Sulfur dioxide (SO2) and mercury emissions from the power sector decline by more than 95 percent and emissions of oxides of nitrogen (NOx) decline by about 75 percent by 2030 relative to a current policy scenario. Electricity generation shifts to cleaner sources. The price on carbon causes the US economy to shift from carbon-intensive energy sources to low- and zero-carbon energy sources. Coal is nearly eliminated from the power sector by 2030, with solar, wind, nuclear, and natural gas with carbon capture and storage all providing significantly larger generation shares compared to a current policy scenario. Energy prices rise but do not skyrocket. The price on carbon causes energy prices to increase for all carbon-emitting fuels, which leads to significantly higher overall energy expenditures, though within the range of recent historical variation. Taking two prominent examples, results show EICDA causing national average gasoline prices to increase by about 12 cents per gallon in 2020 and 90 cents per gallon in 2030 and causing national average electricity prices to increase by about 1 and 3 cents per kilowatt hour in 2020 and 2030, respectively. EICDA causes per capita energy expenditures to increase by $200-$210 in 2020 and $1,160-$1,170 in 2030 compared to a current policy scenario. In all years, annual per capita energy expenditures remain below the recent historical peak during the commodities crisis in 2008. The carbon dividend cushions energy price impacts. EICDA generates substantial revenue that is distributed in the form of equal dividend payments. EICDA generates $72–$75 billion in carbon tax revenues in 2020 and $403–$422 billion in 2030. This translates into an annual dividend for eligible adults of $250-$260 in 2020 and $1,410-$1,470 in 2030, with half those amounts also paid to eligible children. On average, the carbon dividend payments are comparable to the changes in energy expenditures caused by EICDA. Because higher-income households purchase far more carbon-intensive goods and services, distributing dividends equally implies that average low- and middle-income households receive more in dividends than they pay in increased economy-wide prices for goods and services resulting from the carbon tax. Net government revenue declines slightly, at least initially. Carbon tax-and-dividend policies are often described as “revenue neutral,” but the impacts of EICDA on government revenue are uncertain and likely negative in the near term. We estimate that the net government revenues under EICDA decline by roughly 10 percent of the annual carbon tax revenue in the early years of the policy. This estimate considers government revenue gains from taxing emissions and dividends, dividend payouts, and government revenue losses from reduced income and payroll taxes from those who pay the carbon tax. However, the proposal will also affect government revenue in other ways that are beyond the scope of our analysis, so the overall impacts on net government revenue is uncertain.
  • Topic: Climate Change, Energy Policy, Green Technology, Carbon Tax
  • Political Geography: United States
  • Author: Noah Kaufman, David Sandlow, Clotilde Rossi de Schino
  • Publication Date: 12-2019
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: In the United States, commercial and residential buildings produce roughly 12 percent of greenhouse gas emissions. Most of these emissions come from burning fossil fuels for space heating. These emissions must be significantly reduced or eliminated for the US to achieve deep decarbonization goals, including net zero emissions by midcentury. Air source heat pumps (ASHPs) are powered by electricity, using well-established technology to move heat from outdoor air to indoor air. When powered by zero-carbon electricity, ASHPs provide space heating with almost no greenhouse gas emissions. ASHPs are especially effective for space heating in mild climates. In 2015, roughly 10 percent of US households (mostly in the Southeast) used air source heat pumps as their primary heating source.[1] ASHPs account for roughly one-third of residential space heating in Japan. The world’s largest ASHP market is in China, where sales are growing rapidly. Prominent studies on decarbonization of the US energy system focus on deployment of air source heat pumps as the primary strategy for reducing emissions from space heating. Some studies show near-universal electrification of space heating, suggesting that ASHPs (with some backup from electric resistance heaters) can be almost a silver bullet solution for decarbonizing space heating. These studies start with the assumption that fossil fuel furnaces and boilers will be gradually phased out. Other studies assume that electric heating technologies such as ASHPs will continue to compete against fossil fuel burning furnaces and boilers in the decades ahead. These studies conclude that furnaces and boilers will retain a significant share in space heating markets, even with technological progress and strong policy support for ASHPs, but often fail to explain why. Do high costs or inferior performance limit market penetration in these studies? Or do other barriers limit ASHP deployment? The answer has important implications for policy makers shaping decarbonization strategies. To help answer these questions, we built a simple model of ASHP adoption that estimates the lifetime costs of space heating and cooling configurations in three US cities with markedly different climates and energy costs: Atlanta, Georgia; San Diego, California; and Fargo, North Dakota. The model analyzes the choices facing hypothetical consumers installing new heating and cooling equipment in residential buildings. The consumers have the option to purchase an ASHP for heating and cooling (with backup if needed) or a natural gas furnace and air conditioner. Based on the model results and related research, we conclude: Air source heat pumps are cost competitive today in places where electricity is cheap and the climate is mild. With climate policies consistent with rapid decarbonization and reasonably foreseeable technological progress, air source heat pumps are the low-cost option for typical residential buildings across much of the US by the mid-2030s. Even in the very cold climate of Fargo, North Dakota, the combination of a price on carbon emissions and steady innovation in ASHPs causes ASHPs (with an electric resistance heater as a backup) to be cost competitive with new natural gas furnaces and air conditioners by the 2030s. If the United States commits to the rapid decarbonization of space heating by midcentury, the costs and performance of ASHPs are unlikely to be major barriers to deployment. However, other important barriers may persist, including contractors’ and homeowners’ greater familiarity with incumbent fossil fuel technologies and the slow turnover of the building stock. As a result of these additional barriers, emissions pricing and technological progress alone may not lead to deployment of air source heat pumps in the United States sufficient to achieve deep decarbonization by midcentury. That would likely require additional policy instruments such as technology standards, emissions caps, or mandates. Other technologies can also contribute to decarbonizing space heating, including renewable natural gas, hydrogen produced with carbon capture and storage (CCS) or electrolysis, and centralized or district heating. Each of these options comes with challenges that will require policy support to overcome. This study does not point to a proper balance between ASHPs and other space heating decarbonization technologies. More research is needed to compare different approaches and strategies. In the meantime, our analysis suggests little if any downside to pursuing ambitious policies to promote deployment of ASHPs, prioritizing regions where heat pumps are currently most cost effective. A large-scale increase in ASHP deployments is likely to be an important part of any space heating decarbonization scenario.
  • Topic: Climate Change, Energy Policy, Green Technology, Renewable Energy, Fossil Fuels
  • Political Geography: United States
  • Author: David B. Sandalow
  • Publication Date: 06-2018
  • Content Type: Special Report
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: In 2017, China was the world’s leading emitter of heat-trapping gases by a wide margin. Its policies for limiting emissions will have a significant impact on the global climate for decades to come. From a historical perspective, China’s status as the world’s leading emitter is relatively recent. During most of the 19th and 20th centuries, Chinese emissions were modest. Then, in the early part of this century, as the Chinese economy boomed, Chinese emissions began to skyrocket, overtaking those from the United States around 2006. China’s cumulative emissions of carbon dioxide since the beginning of the Industrial Revolution are less than half those from the United States or Europe. (Carbon dioxide, the leading heat-trapping gas, stays in the atmosphere for many years once emitted.)
  • Topic: Climate Change, Energy Policy
  • Political Geography: Global Focus
  • Author: Philippe Benoit
  • Publication Date: 10-2018
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Argentina, President of the G20, recently released the “Energy Access and Affordability Voluntary Action Plan for Latin America and the Caribbean”, prepared by the Inter-American Development Bank (IDB) & Latin American Energy Organization (OLADE). CGEP Scholar Philippe Benoit served as the lead author of the report (on assignment from the IDB). The report builds on the previous G20 reports prepared for Africa and Asia-Pacific. The LAC Region enjoys access levels that are relatively high compared to other developing zones, but it faces important challenges in connecting the “last mile”. The Region also faces repeated extreme weather events which present the special challenge of access recovery (a major issue for Central America and the Caribbean, as well as Puerto Rico). One of the report’s innovations is that it extends the access effort beyond electricity and clean cooking to residential heat. The report also focuses on the importance of improving affordability of energy for the poor, as well as for other households and businesses.
  • Topic: Climate Change, Energy Policy, Recovery, Electricity
  • Political Geography: Africa, Asia, Latin America, Central America, Caribbean, Puerto Rico
  • Author: Johannes Urpelainen, Wolfram Schlenker, Alice Tianbo Zhang
  • Publication Date: 11-2018
  • Content Type: Working Paper
  • Institution: Center on Global Energy Policy (CGEP), Columbia University
  • Abstract: Dams are a major source of electricity globally, with hydropower generating 16 percent of the world’s total electricity and 71 percent of all renewable electricity in 2016. Many developing countries possess great untapped hydropower potential. Sub-Saharan Africa, for example, is estimated to have tapped less than 8 percent of its hydropower potential. Proponents of dams praise them as a source of low-carbon electricity, estimated to reduce annual emissions by about 2.8 billion tons of carbon dioxide equivalent. Dams also provide wide-ranging benefits in terms of flood control, irrigation, navigation, and job creation. But harnessing the power of the river comes with concentrated costs, from fragmenting the river system and destroying natural habitat to triggering ecological hazards and displacing millions of people. As the world is undergoing an energy system transformation toward renewable sources to combat climate change and meet emission reduction targets outlined in the Paris Agreement, understanding the costs and benefits of dam construction has important policy implications. In this project, the authors compiled a global geospatial database of dams, the GDAT, to enable rigorous research on the costs and benefits of dam construction. The project was motivated by the absence of a comprehensive, reliable, real-time, easy-to-use database on global dam construction. Such data could allow policymakers to make informed decisions on the use of hydroelectric power in the future, based on systematic evaluations of the costs and benefits of hydroelectric dams along the dimensions of energy access, climate change mitigation, water supply, ecological preservation, and population displacement. Below is a summary of findings: Globally, the authors identify 36,222 dams that are spatially concentrated along major river basins in Asia, North America, South America, and Europe. Compared to two widely used datasets, AQUASTAT and Global Reservoir and Dam (GRanD), GDAT has not only 144 percent and 419 percent more dam observations, respectively, but also more comprehensive attribute information, such as completion year, geographic location, main purpose, and reservoir and generation capacity. Dams are used for a variety of purposes, with considerable heterogeneity across continents. Worldwide, dams are mainly used for irrigation and hydroelectricity, representing 34 percent and 25 percent of the data, respectively. There are notable differences in the distribution of dam completion year across continents. While most developed countries in North America, Europe, and Oceania have witnessed a decline in dam construction since the 1970s, developing countries in Africa, Asia, and South America are experiencing a continued increase in the number of dams currently planned or under construction. GDAT makes three important contributions: First, to the best of the authors’ knowledge, no prior effort has been made to consolidate official records with existing datasets such as AQUASTAT, GRanD, and World Resources Institute (WRI). By collecting and compiling primary data from administrative sources and secondary data from existing databases, the authors have offerred the most comprehensive geo-referenced data on worldwide dam construction to date. Second, through extensive cross-checking and manual validation, the authors fill in important data gaps on key attributes and correct erroneous observations in previous datasets. Third, existing datasets are often static and not frequently updated. Efforts are underway to develop a framework for making the data collection and compilation process easily reproducible, so that it can be updated on a reasonable time interval to facilitate intertemporal analysis. Upon publication of academic research papers, the authors are planning to release the entire dataset and documentations to the public, free of charge.
  • Topic: Climate Change, Water, Displacement, Electricity, Renewable Energy, Dams
  • Political Geography: Africa, Europe, Asia, South America, North America