update on nuclear plans and carbon legislation 1 misc points re climate policies -- energy security,...
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UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION 11
Misc points re climate policies -- Energy Security, Benefits to Ag from Legislation, & Impacts on Economy
Kevin Leahy - Managing Director, Climate Policy
Emissions Trading Workshop
Purdue Climate Change Research Center
April 30, 2010
UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION
Climate Regulation is Coming
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UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION
Hidden Upside of Climate legislation for U.S. Agriculture
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•Offset policies that include international forest preservation boost U.S. ag by putting value on existing forest (otherwise slated for conversion to crops or grazing)•Reflected in higher ag product price projections (small impact on retail food price in rich world) (John Reilly)
Natural Forest (“deforestation” scenario)Natural Forest(Melillo, Gurgel, et al. 2008)
Maps from Tim Searchinger presentation (Princeton)
UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION 44Apr. 20, 2010
UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION
The risk for industry
• CAA: If new source has Potential to Emit (PTE) above the Prevention of Significant Deterioration (PSD) threshold, becomes a major source (of pollutant) and potentially subject to PSD permitting requirements. Statute defines major source threshold at 100 or 250 tons/year. (for CO2 emissions -- about $21K of natural gas used/year)
• If move forward with project that emits > 250 tons ($21K/year of nat gas)based on tailoring rule (no air permit), but court vacates rules in future and threshold still 250 tons, you could be held liable for not having obeyed the law – “should have anticipated”• See DC Circuit CAMR decision, 2008
• Who might push this? Local environmentalists/activists? NIMBY issue? Competitor? Anyone with the time and money and an ax to grind against you or your operation.
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UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION
How much overlap between these two?
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UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION 77Apr. 30, 2010
Carbon capture on coal
Drill baby drill
• Hybrid Electric/Plug in vehicles
• Improve Energy Efficiency
• Long transition times
Energy Security
Climate Change
Overlap is larger than expected, but the two issues not identical
•Each side must compromise•Emissions trading aligns the incentives for both in same direction
•Nuclear• Renewable Energy
UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION
Hitting the competitiveness issue
For energy intensive firms or trade exposed, all costs covered by allocation
Updated with production levels – all opportunity, no stick If can reduce, can cash in. If can’t, direct and indirect costs
(electricity price increases) are covered via allocation. Give time to apply pressure to China – remind them of the stick
in the closet (border tax adjustment) This is an approach that could actually encourage production to
stay in U.S. Border tax adjustment on imports from countries with no
climate fee for longer term transition – may be WTO compliant
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UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION 99
The technology future for electricity – EPRI’s 2009 update
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2000 2010 2020 2030 2040 2050
Trill
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kWh
per y
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2000 2010 2020 2030 2040 2050
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Demand with No PolicyCoal
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New CCS
Gas Nuclear
Hydro
Wind Solar
Oil
Demand Reduction
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Demand Reduction
New Coal + CCSCoal
Gas
WindNuclear
Demand Reduction
Nuclear
Limited Portfolio Full Portfolio
Solar
Biomass
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CCS Retrofit
Biomass
Hydro
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UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION
NAM’s Analysis of Climate Legislation (House passed version) “U.S. jobs decline by 1.8 million under the low cost case and by 2.4 million under the high cost
case” “would impose a financial cost on households of $118 to $250 by 2020 and $730 to $1,248 by
2030” “reduce U.S. Gross Domestic Product (GDP) by between $419 billion and $571 billion by 2030
GDP falls by 1.8% under the low cost case and by 2.4% under the high cost case in 2030.”
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Source: NAM/ACCP Economic Impact of Waxman Markey Bill -- http://www.accf.org/media/docs/nam/2009/National.pdf
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Heritage Foundation’s Analysis of Waxman Markey
Apr. 30, 2010
UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION
Same NAM analysis with more complete context
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Answer: NAM – using same dataset used for previous page’s graphs.Source data: http://www.accf.org/media/dynamic/3/media_381.pdf, page 5
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UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION
Heritage just another organization overwhelmed by optimism?
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Empl
oym
ent (
1000
s)
GDP
(billi
ons
$)
Source for above data: Heritage Foundation analysis of Waxman Markey -- http://www.heritage.org/research/energyandenvironment/images/CDA-waxman-markey-appendix-table-2_1.gif
Apr. 30, 2010
UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION
The long and the short
Enhanced Energy Security and lower CO2 emissions are compatible policy objectives & can efficiently use the same market mechanism
Must have an “all the above” mentality when considering energy
Beware those projecting economic collapse or “no costs” proclamations
There will be a costs, but should be affordable – most existing capital stock still good (manufacturing and vehicles)
The economy still grows throughout the transition Year on year price changes should be small but with clear
upward trend for future
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