REMI’s Carbon Tax Report

I came across former NASA climate scientist James Hansen’s email last week supporting a carbon tax.  At the outset, I fully support this policy because it is the most economically effective way to achieve CO2 emission reductions.  An important point is this: it matters a lot how we apply the tax and what happens to the money raised because of it.  Many policy analysts think that the only way a carbon tax will ever pass is for the government to distribute the revenue via dividends to all households.  This obviously has appealing aspects, not least of which is Americans love free stuff.  That is, we love to reap the benefits of policies so long as they cost us nothing.  That attitude is obviously unsustainable – you have simply to look at the state of American infrastructure today to see the effects.

All that said, the specific carbon tax plan Hansen supported came from a Regional Economic Models, Inc. report, which the Citizens Climate Lobby commissioned.  The report found what CCL wanted it to find: deep emission cuts can result from a carbon tax.  There isn’t anything surprising with this – many other studies found the exact same result.  What matters is how we the emission cuts are achieved.  I think this study is another academic dead-end because I see little evidence how the proposed tax actually achieves the cuts.  It looks like REMI does what the IPCC does – they assume large-scale low-carbon energy technologies.  The steps of developing and deploying those technologies are not clearly demonstrated.  Does a carbon tax simply equate to low-carbon technology deployment?  I don’t think so.

First, here is an updated graphic showing REMI’s carbon emission cuts compared to other sources:

The blue line with diamonds shows historical CO2 emissions.  The dark red line with squares shows EIA’s 2013 projected CO2 emissions through 2030.  EIA historically showed emissions higher than those observed.  This newest projection is much more realistic.  Next, the green triangles show the intended effect of EPA’s 2014 power plant rule.  I compare these projections against Kyoto `Low` and `High` emission cut scenarios.  An earlier post showed and discussed these comparisons.  I added the modeled result from REMI 2014 as orange dots.

Let me start by noting I have written for years now that we will not achieve even the Kyoto `Low` scenario, which called for a 20% reduction of 1990 baseline emissions.  The report did not clearly specify what baseline year they considered, so I gave them the benefit of the doubt in this analysis and chose 2015 as the baseline year.  That makes their cuts easier to achieve since 2015 emissions were 20% higher than 1990 levels.  Thus, their “33% decrease from baseline” by 2025 results in emissions between Kyoto’s `Low` and `High` scenarios.

REMI starts with a $10 carbon tax in 2015 and increases that tax by $10/year.  In 10 years, carbon costs $100/ton.  That is an incredibly aggressive taxing scheme.  This increase would have significant economic effects.  The report describes massive economic benefits.  I will note that I am not an economist and don’t have the expertise to judge the economic model they used.  I will go on to note that as a climate scientist, all models have fundamental assumptions which affect the results they generate.  The assumptions they made likely have some effect on their results.

Why won’t we achieve these cuts?  As I stated above, technologies are critical to projecting emission cuts.  What does the REMI report show for technology?

The left graph shows US electrical power generation without any policy intervention (baseline case).  The right graph shows generation resulting from the $10/year carbon tax policy.  Here is their models’ results: old unscrubbed coal plants go offline in 2022 while old scrubbed coal plants go offline in 2025.  Think about this: there are about 600 coal plants in the US generating the largest single share of electricity of any power source.  The carbon tax model results assumes that other sources will replace ~30% of US electricity in 10 years.  How will that be achieved?  This is the critical missing piece of their report.

Look again at the right graph.  Carbon captured natural gas replaces natural gas generation by 2040.  Is carbon capture technology ready for national-level deployment?  No, it isn’t.  How does the report handle this?  That is, who pays for the research and development first, followed by scaled deployment?  The report is silent on this issue.  Simply put, we don’t know when carbon capture technology will be ready for scaled deployment.  Given historical performance of other technologies, it is safe to assume this development would take a couple of decades once the technology is actually ready.

Nuclear power generation also grows a little bit, as does geothermal and biopower.  This latter technology is interesting to note since it represents the majority of the percentage increase of US renewable power generation in the past 15 years (based on EIA data) – something not captured by their model.

The increase in wind generation is astounding.  It grows from a few hundred Terawatt hours to over 1500 TWh in 20 years time.  This source is the obvious beneficiary to a carbon tax.  But I eschew hard to understand units.  What does it mean to replace the majority of coal plants with wind plants?  Let’s step back from academic exercises that replace power generation wholesale and get into practical considerations.  It means deploying more than 34,000 2.5MW wind turbines operating at 30% efficiency per year every year.  (There are other metrics by which to convey the scale, but they deal with numbers few people intuitively understand.)  According to the AWEA, there were 46,100 utility-scale wind turbines installed in the US at the end of 2012.  How many years have utilities installed wind turbines?  Think of the resources required to install almost as many wind turbines in just one year as already exist in the US.  Just to point out one problem with this installation plan: where do the required rare earth metals come from?  Another: are wind turbine supply chains up to the task of manufacturing 34,000 wind turbines per year?  Another: are wind turbine manufacturing plants equipped to handle this level of work?  Another: are there enough trained workers to supply, make, transport, install, and maintain this many wind turbines?  Another: how is wind energy stored and transmitted from source to use regions (thousands of miles in many cases).

Practical questions abound.  This report is valuable as an academic exercise, but  I don’t see how wind replaces coal in 20 years time.  I want it to, but putting in a revenue-neutral carbon tax probably won’t get it done.  I don’t see carbon capture and sequestration ready for scale deployment in 10 years time.  I would love to be surprised by such a development but does a revenue-neutral carbon tax generate enough demand for low-risk seeking private industry to perform the requisite R&D?  At best, I’m unconvinced it will.

After doing a little checking, a check reminded me that British Columbia implemented a carbon tax in 2008; currently it is $40 (Canadian).  Given that, you might think it serves as a good example of what the US could do with a similar tax.  If you dig a little deeper, you find British Columbia gets 86% of its electricity from hydropower and only 6% from natural gas, making it a poor test-bed to evaluate how a carbon tax effects electricity generation in a large, modern economy.

N.C.’s Sea Level Rise Reaction

Many people involved in climate activism have probably heard of North Carolina’s reaction to sea level projections.  The reaction has been exaggerated by some of those same activists.  I read this article and had the following thoughts.

By the end of the century, state officials said, the ocean would be 39 inches higher.

There was no talk of salvation, no plan to hold back the tide. The 39-inch forecast was “a death sentence,” Willo Kelly said, “for ever trying to sell your house.”

Coastal residents joined forces with climate skeptics to attack the science of global warming and persuade North Carolina’s Republican-controlled legislature to deep-six the 39-inch projection, which had been advanced under the outgoing Democratic governor. Now, the state is working on a new forecast that will look only 30 years out and therefore show the seas rising by no more than eight inches.

Up to this point, readers probably have one of two reactions.  They either agree with quoted environmentalists and think N.C. tried to “legislate away sea level rise.”  Or they agree with Kelly’s reactions and the legislature’s boundaries on projection scope.

I think the reactions were entirely justified from a personal standpoint and easy to predict if anyone had stopped to think things through.  Nearly everybody would have the same reaction if your property was under threat to be considered worthless – regardless of the underlying reason.  Why?  Because you have an emotional attachment to your property that far exceeds the attachment to a 90-year sea level projection.  You’re going to react to the former more strongly than the latter.  The article identifies the underlying process:

“The main problem they have is fear,” said Michael Orbach, a marine policy professor at Duke University who has met with coastal leaders. “They realize this is going to have a huge impact on the coastal economy and coastal development interests. And, at this point, we don’t actually know what we’re going to do about it.”

This is the problem with the vast majority of climate activists’ language: they coldly announce that civilization will collapse and won’t offer actions people can take to avoid such a collapse.  Well, people will respond to that language, just not the way activists want them to.  People will fight activists and identify with climate skeptics’ arguments since they view the announcements as a threat to their way of life.

Where I differ with Kelly and others is this: she and other coastal residents had better look for viable long-term solutions before that 30-year period is over.  If they prevent long-term planning beyond 2040, inland residents of N.C. will be unfairly burdened with the cost of subsidizing Kelly and others for their lifestyle choices.

Kelly’s view is not without merit, to be sure:

Long before that would happen, though, Kelly worries that codifying the 39-inch forecast would crush the local economy, which relies entirely on tourism and the construction, sale and rental of family beach houses. In Dare County alone, the islands’ largest jurisdiction, the state has identified more than 8,500 structures, with an assessed value of nearly $1.4 billion, that would be inundated if the tides were 39 inches higher.

That’s 8,500 structures in just one county – worth $1.4 billion – an average of $165,000 per structure.  I would absolutely fight to keep my $165,000 worth as long as I could.  Nationwide, the estimate is $700 billion; not a trivial sum is it?  The article has this choice quote:

“What is it you would ask us to do differently right now? Tell people to move away?”   “Preaching abandonment is absurd. People would go in the closet and get the guns out.”

The Coastal Resources Commission bungled their attempt to evaluate the science and establish policy.  By the time they announced results with no action plans, rumors fed by misunderstanding and bias confirmation ran rampant.  The result was Kelly’s actions to change the time horizon that planners could use.

So what are the solutions?  The Commission should establish and maintain relationships with stakeholders.  Get to know the mayors and planners and scientists and property owners.  Find out what their interests are and what motivates them to do what they do.  Identify actions they can take in the next 30 years that sets them up for success afterward.  But don’t release information without context.  Because sea level rise is likely to accelerate in the 2nd half of the 21st century.  But most people will focus on potential direct threats to themselves and their livelihoods, not global concerns.  So get into the weeds with folks.

More on EPA’s Proposed CO2 Emissions Rule: Podesta; Role of Science

I just found this article and wanted to point out a couple of things related to my post on the EPA’s proposed CO2 emissions rule.  The first (emphasis mine):

In a two-hour interview conducted just weeks before his return to Obama’s inner circle as White House Counsel, Podesta told me that the president had been willing to take risks and expend political capital on the climate issue. “But fifty years from now, is that going to seem like enough?” Podesta asked. “I think the answer to that is going to be no.”

Podesta blamed Obama’s spotty climate record in part on the president’s top aides during his first term (aides who Podesta, as Obama’s transition director in 2008, helped select). The aides’ attitudes about climate change, Podesta recalled, were dismissive at best: “Yeah, fine, fine, fine, but it’s ninth on our list of eight really important problems.”

I agree with Podesta’s assessment that fifty years from now people will look back and judge that Obama and everyone else didn’t do enough to curtail GHG emissions and prevent a great deal of additional global warming.  That isn’t a slight on Obama’s character – or anyone else’s – it’s a statement on how I view action on the topic.

Isn’t it interesting that Podesta helped select the same aides who refused to push climate higher on the problem list?  Podesta is a smart guy – he knew what peoples’ pet issues were and what weren’t on their list of priorities.  So in the same interview that Podesta says Obama’s climate actions won’t seem like enough in fifty years, Podesta lays some blame at the feet of first-term aides who didn’t prioritize climate for the lack of Obama’s action.  Perhaps a little self-assessment didn’t make the article due to editing, but it would be nice to see people take responsibility for how we’ve gotten here.  That includes Democrats and climate activists right along with Republicans and skeptics.

The next quote really rankles me:

The Obama Administration’s newly proposed regulations on power plants illustrate how the president continues to fall short of what science demands in the face of rapidly accelerating climate change. From a scientific perspective, there is much less to these regulations than either industry opponents or environmental advocates are claiming.

[…]

The science he is faced with […] demand actions that seem preposterous to the political and economic status quo.

This language implicitly assumes that what certain people want should take precedence over others.  The author, like many others, think they would like those certain people to be scientists instead of conservative theologians or accountants or any other person.  Science doesn’t demand anything in this or any other instance.  We use physical science to assess what the physical effects of GHGs have been and will be on the climate system.  That’s where physical science ends.  If you want to do anything about that information, you bring in social science – political science, sociology, environmental science, philosophy, etc.  Those fields have much to say about what to do and why a particular course of action might be desirable – see normative theory.

Too many people confuse the two.  Or more accurately in the climate change realm, they argue using physical science as a proxy in normative debates.  This is a large source of the polarization of science today.  Instead of using proxies, people should debate the core issues.  If the core issue is the political left versus right, the debate should be on value systems and specific values.  Instead, people drag climate science into the normative debate and among the results is the refusal to accept climate science as valid by skeptics.  This has more to do with perception of legitimate authority than the actual science.

Back to the science:

Podesta, however, acknowledged that Obama’s climate policy (as it stood last November) would not hit the 2°C target. “Maybe it gets you on a trajectory to three degrees,” he said, “but it doesn’t get you to two degrees.”

I wrote much the same thing.  The science is quite clear on this.  Whether you think the policy is bad or good or whether hitting or not hitting the 2°C target is a bad or good thing are separate discussions.  Personally, I think not hitting the 2°C target is a bad thing.  But I know that’s a normative judgment about a scientific result.  I therefore support more effective policy actions such as a carbon tax.

Again, this rule is merely proposed at this time.  EPA originally said it would propose the rule in 2011-2012, then put it on indefinite hold so Obama could run for re-election.  It will now face legal challenges.  It will not go into effect for at least two years, and quite possibly four to six years after all the legal challenges.  In that time frame, we will have at least one new president, who will put their choice for EPA administrator in place, who will be responsible for directing the agency on the rule’s implementation.  The rule will be effective until 2030 and will face two additional presidential election results.  Do climate activists think Republicans will leave the rule alone through 2030?  How do we square that with the knowledge the rule is far from sufficient to limit warming to <2°C?  What are the next policy steps with these real world boundaries?

EPA’s Proposed CO2 Emissions Rule in Context

If you follow climate and energy news, you probably have or will encounter media regarding today’s proposed CO2 emissions rule by the EPA.  Unfortunately, that media will probably not be clear about what the rule means in understandable terms.  I’m writing this in an attempt to make the proposed rule more clear.

The graph above shows US CO2 emissions from energy consumption.  This includes emissions from coal, oil, and natural gas.  I have differentiated historical emissions in blue from 2013 EIA projections made in red, what today’s EPA proposal would mean for future emission levels, and low and high reductions prescribed by the Kyoto Protocol, which the US never ratified.

In 2011, historical US energy-related emissions totaled 5,481 million metric tons of CO2.  For the most part, you can ignore the units and just concentrate on emission’s magnitude: 5,481.  If the EPA’s proposed rule goes into effect and achieves what it sets out to achieve, 2020 emissions could be 4,498 MMT and 2030 emissions could be 4,198 MMT (see the two green triangles).  Those 2030 emissions would be lower than any time since 1970 – a real achievement.  It should be apparent by the other comparisons that this potential achievement isn’t earth shaking however.

Before I get further into that, compare the EPA-related emissions with the EIA’s projections out to 2030.  These projections were made last year and are based on business as usual – i.e., no federal climate policy or EPA rule.  Because energy utilities closed many of their dirtiest fossil fuel plants following the Great Recession due to their higher operating costs and the partial transfer from coal to natural gas, the EIA now projects emissions just above 2011’s and below the all-time peak.  I read criticism of EIA projections this weekend (can’t find the piece now) that I think was too harsh.  The EIA historically projected emissions in excess of reality.  I don’t think their over-predictions are bad news or preclude their use in decision-making.  If you know the predictions have a persistent bias, you can account for it.

So there is a measurable difference between EIA emission projections and what could happen if the EPA rule is enacted and effective.  With regard to that latter characterization, how effective might the rule be?

If you compare the EPA emission reductions to the Kyoto reductions, it is obvious that the reductions are less than the minimum requirement to avoid significant future climate change.  But first, it is important to realize an important difference between Kyoto and the EPA rule: the Kyoto pathways are based off 1990 emissions and the EPA is based off 2005 emissions.  What happened between 1990 and 2005 in the real world?  Emissions rose by 19% from 5,039 MMT to 5,997 MMT.  The takeaway: emission reductions using 2005 as a baseline will result in higher final emissions than using a 1990 baseline.

If the US ratified and implemented Kyoto on the `Low` pathway (which didn’t happen), 2020 emissions would be 4,031 MMT (467 MMT less than EPA; 1445 MMT less than EIA) and 2050 emissions would be 2,520 MMT (no comparison with EPA so far).  If the US implemented the `High` pathway, 2020 emissions would be 3,527 MMT (971 MMT less than EPA!; 1,949 MMT less than EIA!) and 2050 emissions would be drastically slashed to 1,008 MMT!

Since we didn’t implement the Kyoto Protocol, we will not even attain 2020 `Kyoto Low` emissions in 2030.  Look at the graph again.  Connect the last blue diamond to the first green triangle.  Even though they’re the closest together, you can immediately see we have a lot of work to do to achieve even the EPA’s reduced emissions target.  Here is some additional context: to keep 2100 global mean temperatures <2C, we have to achieve the lowest emissions pathway modeled by the IPCC for the Fifth Assessment Report (see blue line below):

Note the comment at the bottom of the graph: global CO2 emissions have to turn negative by 2070, following decades of declines.  How will global emissions decline and turn negative if the US emits >3,000 MMT annually in 2050?  The short answer is easy: they won’t.  I want to combine my messages so far in this post: we have an enormous amount of work to reduce emissions to the EPA level.  That level is well below Kyoto’s Low level, which would have required a lot of work in today’s historical terms.  That work now lies in front of us if we really want to avoid >2C warming and other effects.  I maintain that we will not reduce emissions commensurate with <2C warming.  I think we will emit enough CO2 that our future will be along the RCP6.0 to RCP8.5 pathways seen above, or 3-5C warming and related effects.

Another important detail: the EPA’s proposed rule has a one-year comment period which will result in a final rule.  States then have another year to implement individual plans to achieve their reductions (a good idea).  The downside: the rule won’t go into effect until 2016 – only four years before the first goal.  What happens if the first goal isn’t achieved?  Will future EPA administrators reset the 2030 goal so it is more achievable (i.e., higher emissions)?  Will lawsuits prevent rule implementation for years?  There are many potential setbacks for implementing this rule.  And it doesn’t achieve <2C warming, not even close.