climate policy
DESCRIPTION
This is a climate policy presentation I created over the summer of 2009 for an internship I was involved in.TRANSCRIPT
WHAT’S ALL THE FUSS ABOUT CARBON?
Explaining the climate policy debate
What are some of the hottest issues in the climate change debate now before the Senate?
Border Adjustments
Subprime Carbon Covered sites Auction vs.
Allocation Offsets Fraud
Timeline for Climate Policy Even if the Democrats
get the 51 votes they need, there will still be large changes needed to consolidate the Upper and Lower house plans
EPA must have an active greenhouse gas registry within six months of enactment.
USDA offset protocols completed within 12 months of bill passage.
Reporting would begin in 2011 for the years 2007-2010; with quarterly reporting in 2011.
US Government’s own standards
30% reduction in vehicle fleet use by 2020
50% recycling by 2015
Responsible purchasing
500,000 buildings 600,000 vehicles 22,000
employees
What is a Carbon Tariff?
Why NOT Have a Carbon Tariff?
It would damage efforts for a multi-lateral agreement that is critical for overall progress.
Industrialized countries are responsible for the climate change we are experiencing.
CO2 currently in atmosphere
US – 27% Europe – 20%China – 8% India – 3%
Auctioning vs. Allocation of Allowances
“(a 100% free allocation) would represent the largest corporate welfare program that has ever been enacted in the history of the United States.”
- Peter Orszag
Point Carbon, a market analysis firm, estimates the current House bill earmarks $254 billion in allowances
-- one sixth of the estimated total value of allowancesfrom 2012 through 2030.
Auctioning vs. Allocation It doesn’t really matter how
many of the allowances you auction. It matters how many allowances are allocated…how large the cap is.
Example – European cap was 1.9 billion tonnes in 2008. If passed, the US cap would be ~ 4.6 billion tonnes.
HR2454 gives away a large portion of the allowances to allow US carbon-intensive industries an opportunity to develop and deploy low carbon technologies.
This is to soften impact to
American consumers. There are numerous provisions in the bill to protect consumers against windfall profiting by industry.
ACES / HR2454 / Waxman-Markey
Distribution Distribution by
Watt/Hours CO2e
This breaks down to coal/rural areas being affected less than nuclear/urban areas.
Emission vs. Generation
Is this 1980 or 2010?
Energy
ACES / HR2454 / Waxman-Markey
Gives away > 65% of the allowances until 2020 to allow carbon intensive industries 12 years to develop & implement strategies to
level the playing field.
This is far from the 100% auction proposed by many environmental organizations, the
president, and RGGI.
Clean Energy Jobs & American Power Act
Passed from committee in late September.
Expected to pass sometime after the new year.
Something to Think About…… 7400 facilities
covered under proposed cap & trade.
~5000 electrical generation stations
143 oil refineries
Carbon Exposed Industries
Aluminum Steel Paper Cement Chemicals Iron Ore
Lime Livestock Electronic
s? Cement Chemicals Iron Ore
Offsets – Domestic and International
Offsets, cont. Sets up a "strategic
reserve" of 2.5 billion metric tons of emission allowances in the event carbon prices rise faster than expected or reach unexpectedly high levels at auction Example - $28 price trigger
in 2012 After 2015 trigger price is
60% above 36 month average
The EPA would determine eligible offset projects based on recommendations from an Offsets Integrity Advisory Board
If there are not enough offsets available on the U.S. market, up to three-quarters could come from international sources
Establishes a $11 per ton price floor
What About Early Actors? Offsets created
before January 1, 2009 will receive the average value of those offsets between:
1/1/06-1/1/09
Differences between House & Senate Bills
17% reduction 20% reduction Methane
containment
Will this bill create another financial derivatives mess like the one we just went through?
How can we keep this kind of speculation
from creating artificial price signals in the carbon market?
“Subprime Carbon”
In HR2454 allowance, offset, and REC derivatives are regulated by the CFTC.
The FERC would have “cease & desist” authority over those holding positions which are artificially effecting price outside of supply & demand.
In the OTC market, 35% of the credits traded were for investment instead of retirement (29%).
Voluntary purchasing from NGOs and individuals lowered from 2% to 1% between 2007 to 2008.
Who can trade in this market? Non-regulated entities
(banks, nonprofits, people like you) can also buy and sell permits
Cash market trading of allowance, offset, and REC derivatives are permitted.
OTC trading of these derivatives are not. Citizens of Venus cannot trade on spot or OTC market
Carbon Limits and Energy for America’s Renewal - CLEAR
The contrasting bill in the Senate to the Kerry/Boxer
Cap & Dividend No secondary
markets
The Role of the USDA in HR2454
In a concession to Blue Dog Democrats congress released control of agricultural offsets from the EPA to the USDA.
This is viewed as a move that will be more forgiving for America’s farmers.
The EPA has traditionally been considered out-of-touch with standards achievable by the agricultural community.
USDA cont…
The USDA is keenly aware of the historical effects of energy prices on farming.
They would be well suited to help farmers deal with the increasing costs of energy, which typically account for
Energy costs as a share of operating expenses2005-2008 average
Energy use per unit of total farm
Carbon Sequestration Potential by Region
Winners in HR 2454
Nuclear Wind Solar Biomass Geothermal
Energy Efficiency is a big winner Sec. 201 of HR 2454 calls for
national building code energy reduction targets of:
• 30% below the baseline energy code in 2010
• 50% below the baseline energy code in 2014-2015
• 5% additional reduction every three years to 2029-2030.
Section 782g direct 9.5% of allowances in 2012 (decreasing amounts thereafter) go to a SEED account used by state and local governments for efficiency and renewables projects.
RGGI – Regional GHG Initiative
Only generation sites
25MW capacity
Fossil Fuels
Questions?
“We never have 100% certainty.If you wait until you have 100% certainty, Something bad is going to happen on the battlefield.”
That’s something we know. —GEN Sullivan
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EPA Analysis of the American Clean Energy and Security Act of 2009 H.R. 2454 in the 111th Congress. Issue brief. Washington D.C.: EPA, 2009. Print.
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Forum, 2009. Print. MAINTAINING CARBON MARKET INTEGRITY. Rep. The Energy Foundation, 2009. Print. Marquis, Laura. Carbon Market Summary - April 2009. Rep. Department of Energy & Climate Change, 2009. Print. Policies to Reduce Emissions from the Transportation Sector. Rep. Pew Center on Global Climate Change, 2009. Print. Shapiro, Allison. Can US Plan Entice Polluters into Early Reduction of Greenhouse Gas Emissions? Rep. Ecosystem Marketplace,
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