23 Energy Policies That Could Save Americans $5 Billion a Year

Same Climate-Friendly Policies Would Create 2.5 Million Jobs, Study Finds

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As Sens. John Kerry and Lindsey Graham prepare to unveil their compromise climate and energy plan next week, Congress is getting a detailed look at what stakeholders around the country would like to see.

The Center for Climate Strategies analyzed climate actions plans and proposals created in 16 states by teams of stakeholders — leaders of businesses, industries, environmental groups, local governments and others. In a report being announced on Capitol Hill today, it narrowed down the more than 900 policy options to 23 that it dubs the “super options.”

In general, those super options have either the greatest greenhouse gas reduction potential or they are highly cost-effective.

“Are there winners and losers? Yes,” says economist Adam Rose, a co-author of the study. “But the downsides of these policies are small compared to economic gains, and the energy security improvements are significant.

“Overall, the American consumer will be the winner because we will have a more efficient and independent energy sector, and a more efficient economy.”

Three Scenarios

If all 23 super options are implemented nationwide, the result would be 2.5 million net new jobs and a $134.3 billion expansion of gross domestic product in 2020, according to the study’s authors.

Businesses and households would also save over $5 billion in 2020, an average savings of $1.57 per ton of greenhouse gas emissions removed, the study finds. Fossil fuel prices would fall, and the nation could cut its greenhouse gas emissions to 27 percent below 1990 levels in 2020 — far more than currently proposed by either Congress or the president.

The authors also looked at the impact if those 23 options were coupled with a limited carbon cap and emissions permit auction for electricity and industry, plus a gas tax — elements that have been discussed as potential parts of a senate climate and energy bill.

Taken together, the number of jobs that would be created under that scenario grows to 2.8 million — but only if the majority of the auction revenue, 75 percent, is returned to consumers and the rest is invested in clean energy technology research and energy efficiency.

“If the revenue is not reinvested, you don’t get that level of job benefit. The stimulus effects of those investments are high,” explained Tom Peterson, president and CEO of the Center for Climate Strategies.

That suggests an approach like the CLEAR Act cap-and-dividend plan proposed by Sens. Susan Collins (R-Maine) and Maria Cantwell (D-Wash.).

Under a third scenario, one that combines the 23 super options with cap-and-trade, but shoots for the more modest greenhouse gas reduction of 17 percent below 2005 levels that Congress has proposed, the benefits are less impressive. That combination would result in 1.8 million net new jobs in 2020, a $107.6 billion expansion in gross domestic product, and $2.7 billion net economic savings in 2020.

Federal vs. State Action

To get those numbers, the authors recommend detailed plans of action for each of the 23 super options.

Pulling it off will require action at all levels of government — federal, state and local — which raises questions about some recent proposals in Washington that aim to preempt states’ ability to regulate greenhouse gases. One key to success is allowing states enough flexibility so, for example, Michigan and Florida can both implement renewable portfolio standards but do so in ways that best take advantage of their strongest renewable energy sources.

Likewise, leaving the federal government out of the picture and counting on the states to act won’t realize the full economic potential, Peterson said. Federal policy is necessary as a means to drive those changes.

“You get these benefits if the 23 actions are done in all 50 states. The only way that happens, realistically, is under a national framework with federal support,” he said.

Saving Money and Emissions

For each of the 23 super options, the report calculates the annual greenhouse gas reduction expected by 2020 and the cost or savings per ton of greenhouse gases removed under that option.

Among them, two super options stand head and shoulders above the pack in terms of greenhouse gas reduction in 2020: renewable portfolio standards, which require utilities to derive a percentage of their power from renewable energy sources such as wind and solar, and energy efficiency measures through demand side management. A federal RPS is estimated to reduce greenhouse gases by 508 million metric tons of CO2 equivalent a year by 2020, and the energy efficiency measures would be expected to cut emissions an additional 425 MMtCO2e.

Also high on the list of greenhouse gas reducers are nuclear power (300 MMtCO2e), enhanced recycling of municipal solid waste (249 MMtCO2e), reforestation (179 MMtCO2e), high-performing buildings (193 MMtCO2e), and strong building codes (161 MMtCO2e).

It’s important to remember that these numbers are for the year 2020. Technologies such as carbon capture and storage will still be early in their development stages then, solar will have yet to fully scale up, and nuclear power will still be rebuilding after years of neglect, so their potential contributions to annual greenhouse gas reductions won’t yet be fully realized. The study takes these time frames into account.

“The farther into the future, the more important technologies will be,” Peterson said. “Clearly there is a set that is very critical in terms of stage setting for the next generation.”

In addition, the study broke down the cost per ton of greenhouse gases removed and found huge cost benefits from basic changes in behavior and construction. Anti-idling technologies and practices, for example, save $65.19 per ton of greenhouse gases removed. Appliances standards save $53.21 per ton of greenhouse gases removed, and energy efficiency measures save $40.71 per ton.

Two more policies with big savings that might surprise involve shifting shipping from trucks to rail — a savings of $91.56 per ton of greenhouse gases removed — and vehicle purchase incentives to encourage efficient fleets and cars, with a savings of $66.37 per ton of greenhouse gases removed.

The Senate staffers and advisors working on the Kerry-Graham proposal are aware of the study, but the center hasn’t been working them directly — yet.

The Super Options

Here’s a brief look at the 23 super options and their expected net cost per ton of greenhouse gases removed. The report being announced today at a Capitol Hill briefing goes into the specific policy design details, including timing, targets and the parties involved in each element of each option.

Renewable Portfolio Standards — Cost: $17.84 per ton of greenhouse gases removed. About two dozen states already require their utilities to get a certain percentage of their electricity from clean, renewable sources through renewable portfolio standards.

Nuclear Power — Cost: $26.98 per ton. Nuclear power is a low-emitting power source, but the industry has lagged in recent decades, in part due to the expense; the last new plant came online in 1996.

Carbon Capture and Storage or Reuse — Cost: $32.92 per ton. CCS is designed to capture and store emissions from power plants before they can enter the atmosphere. The captured CO2 can also be used for enhanced recovery of oil and gas. President Obama supports CCS, but deploying the technology on a wide scale is well over a decade away.

Coal Plant Efficiency or Repowering — Cost: $12.95 per ton. This involves increasing generation efficiency at power stations through such methods as installing more efficient boilers and turbines, improving control systems, using combined-cycle technology or switching to low-emitting fuels, such as natural gas or biomass.

Energy Efficiency: Demand Side Management — Cost: -$40.71 per ton. Using policies to lower demand-side electricity use can cut emissions for a net financial gain. Some examples include savings targets, public benefit charges, portfolio standards, energy trusts, integrated resource planning, performance-based incentives, decoupling of rates and revenues, and appropriate rate treatment for efficiency.

High Performance Buildings — Cost: -$24.99 per ton. Setting incentives and targets for building owners and developers to meet high-efficiency standards can also significantly cut energy use at a net savings. The building sector right now consumes about 40 percent of energy used in the United States.

Appliance Standards — Cost: -$53.21 per ton. Setting appliance efficiency standards reduces the market cost by creating economies of scale. Policies can be at the state and federal levels, and regional coordination of standards can avoid concerns that manufacturers will target their least efficient models to states without standards.

Building Codes — Cost: -$22.86 per ton. These state and local codes specify energy efficiency requirements for new buildings or buildings being renovated. Amending the codes can increase energy efficiency.

Combined Heat and Power — Cost: -$13.18 per ton. Encouraging CHP systems improves efficiency and avoids the energy lost when power is transmitted.

Vehicle Purchase Incentives — Cost: -$66.37 per ton. Governments programs like “Cash for Clunkers” can provide incentives for the public and companies to buy low-emitting vehicles. Another option is pay-as-you-drive auto insurance, which bases insurance on miles driven rather than a monthly fee.

Renewable Fuel Standard — Cost: $57.14 per ton. These regulations require a percentage of fuel sold to be biofuel, such as ethanol or biodiesel.

Smart Growth/Land Use — Cost: -$1.11 per ton. States can encourage smart growth planning that reduces sprawl and maximizes environmental and economic resources by providing information, technical assistance and models for local communities to follow. Policies can include open space protection and transit-oriented development.

Transit — Cost: $16.72 per ton. Expanding public transit options, such as bus and rail, can cut automobile emissions.

Anti-Idling Technologies and Practices — Cost: -$65.19 per ton. Several states and local governments set limits on how long buses and trucks can idle. Technologies such as truck stop electrification and automatic engine shut-down/start-up system controls can reduce those emissions, as well.

Shift from Truck to Rail — Cost: -$91.56 per ton. Carrying freight by rail rather than trucks can reduce emissions, fuel consumption, idling, roadway congestion and wear and tear on highways.

Crop Production Practices — Cost: $15.69 per ton. Encouraging no-till farming and crop rotation can increase the amount of carbon stored in soil. Improving the efficiency of fertilizer can reduce nitrous oxide emissions and runoff.

Anaerobic Digestion and Methane Utilization — Cost: $11.27 per ton. Manure digesters at livestock operations can be used to create heat or power, offsetting fossil fuel use and greenhouse gas emissions.

Forest Retention — Cost: $39.38 per ton. Easements and conservation programs can help preserve existing forests.

Reforestation/Afforestation — Cost: $33.18 per ton. Establishing forests on open land or deforested land can increase natural carbon storage.

Urban Forestry — Cost: $13.35 per ton. Urban greenery can absorb carbon and reduce cooling needs by providing shade.

Reducing Municipal Solid Waste — Cost: -$3.20 per ton. Reducing the amount of waste generated limits greenhouse gases associated with landfill methane and the production of raw materials.

Recycling Municipal Solid Waste — Cost: $13.39 per ton. Governments can create incentives for recycling waste such as construction materials and develop markets for recycled materials.

Landfill Gas Management — Cost: $0.34 per ton. Landfills can harness methane through anaerobic digestion to create electric power, heat or liquefied natural gas.


See also:

Fuel Efficient Fleets Saving Corporations Money

Trash-Based Biofuels Could Alleviate Land Use, Emissions Issues

States Look to Feed-in Tariffs to Boost Renewable Energy

Colorado Shoots for 30% Renewable Energy by 2020, a Stark Contrast to Its Neighbors