The Federal Government has yet to approve a specific climate policy.  Since the U.S. Senate rejected the 1997 Kyoto Protocol no Administration has formally proposed a climate policy to Congress.  The Federal Government has, however, developed many non-climate energy regulations that have significantly reduced U.S. carbon emissions over past 30 years.  And, since the Supreme Court empowered the EPA to control carbon emissions, the U.S. is being subjected to miscellaneous carbon reduction regulations without well defined climate policy objectives.  Why does the U.S. still lack an effective climate policy today?

Kyoto Protocol – The protocol was created to stabilize atmospheric greenhouse gas (or carbon equivalent; CO2-e) concentrations at levels that would mitigate future climate change.  Most nations including the U.S. helped develop this UNFCCC agreement during the 1990’s.  Kyoto Protocol signatory (Annex) Developed countries tentatively agreed to reduce their 1990 baseline CO2-e emission levels by up to 80% in 2050.

The U.S. Senate unanimously approve a resolution (S. Res. 98) to not ratify the Kyoto Protocol.  Primary S. Res. 98 justification was due to the protocol exempting all (non-Annex) Developing countries from CO2-e reduction commitments and the potential serious harm to the U.S. economy.  In other words, the Senate did not believe the Kyoto Protocol would achieve its goal of controlling atmospheric CO2-e emissions without Developing countries’ participation.  

Federal Regulations That Have Reduced U.S. Carbon Emissions – Many Federal regulations have been implemented since the mid 1970’s to mitigate future energy crises and increase U.S. energy security.  Many of these energy regulations have also significantly reduced U.S. carbon emissions.     Federal regulations with greatest impact on U.S. carbon emissions included increased energy efficiency, expanding renewable electric power generation, and replacing petroleum motor fuels with alternatives.

  • Mobile Efficiency Upgrades; ‘Corporate average fuel efficiency’ (CAFE) standards were initially established by the EPCA 1975 regulation.  Light duty vehicles (LDV) efficiencies have doubled since the 1970’s due to CAFE standards.  Recent CAFE standard increases (EISA 2007) and further 2012 NHTSA/EPA upgrades should double LDV fuel efficiency again within 20-25 years.
  • Stationary Efficiency Upgrades; Energy policies (beginning with ESA 1980) were implemented to reduce U.S. energy consumption by encouraging increases in buildings, heating/cooling equipment and major appliances efficiencies.   Over the years additional energy regulations were passed (such as EPAct 1992) that expanded energy efficiency support programs. 
  • Renewable Power Generation; The ESA 1980 regulation also initiated developing renewable power sources including geothermal, biomass, solar and wind.  Other Federal regulations (EPAct 1992 & 2005) further encouraged renewable power generation through (per KWH) subsidies and investment tax credits.  More recent financial support has come from the ARRA 2009.  Over the past 25 years renewable power has increased at relatively modest rates.  Wind power, however, has grown very significantly in recent years. 
  • Renewable Motor Fuels; Alternatives to petroleum motor fuels have been supported by many Federal regulations since the ESA 1980.  The most successful alternative fuel has been ethanol.  Ethanol blending has increased substantially due to ‘renewable fuel standards’ created by the EPAct 2005 and EISA 2009.

Ethanol blending has displaced 7% of total current U.S. petroleum gasoline consumption.  Ethanol has helped reduced oil imports and increased energy security, but has only reduced relatively modest amounts of carbon emissions compared to energy efficiency improvements, increased renewable power generation, and, power plant fuel switching from coal to natural gas.  Fuels switching is the result of free market factors (lower cost natural gas) and recent regulations (EPA coal plant restrictions).

Impacts of Existing and Past Energy Regulations – Total U.S. carbon emissions have generally increased over the past several decades until about 2005.  Refer to the following graph:

Image

EIA Carbon Dioxide (CO2) from Energy Consumption data

Total U.S. carbon emissions increased almost steadily 1983 to 2005.  The combination of increased energy efficiency, renewable power and power plant fuel switching has significantly reduced the annual rates of U.S. carbon emissions.  Past energy regulations and relatively cheap natural gas have effectively capped total U.S. carbon emissions by about 2005 and facilitated subsequent emission declines over the past 5 years.  The above graph also illustrates the very significant impacts of past economic recessions on carbon emissions (Re. 1980-82, 1990, 2001, and the 2007-09 recessions).

Past Federal energy regulations have impacted the carbon emissions of all End-use sectors.  Refer to the following graph:

Image

 EIA ‘CO2 from Energy Consumption’ data.  Note: End-use sectors (Transportation, Industrial, Residential and Commercial) includes carbon emissions from Electric Power consumption.  The (Electric) Power sector emissions are based on primary fossil fuels consumed for gross generation.

Most U.S. End-use sectors’ carbon emissions generally peaked about 2005.  Past energy regulations have reduced the rate of the Residential and Commercial sectors carbon increases following 2000.  Although the Industrial sector was not significantly affected by most past energy regulations, this sector’s carbon emissions peaked in 1997.  Peaking Industrial sector carbon emissions has been due primarily to normal free market behavior and increased energy costs.  Maximizing Industrial sector profit margins normally involves continuously improving energy efficiency; independent to government regulations.  The Transportation sector carbon emissions have increased almost steadily 1982-2006, but at a significantly lower rate then what would have occurred without Federal CAFE standards.  The recent decline in Power sector carbon emissions is primarily due to fuel switching from coal to lower cost natural gas, followed by expanded renewable power.  Depending on how aggressive the EPA is towards coal power in the future, this declining trend could accelerate.

Factors That Influence End-Use Carbon Emissions – Other than energy efficiency, increased renewables and fuels switching, the factors that most impact carbon emissions include growth in the overall economy, consumers’ behavior and total population.  Following World War II the U.S. economy grew at rates greater than most countries.  The combination of free markets and Federal energy regulation improvements, and the overall economy’s near continuous energy efficiency improvements, has led to continuous decreases in carbon emissions per unit ‘gross domestic product’ (GDP) output.  Refer to the following graph:

Image

Based on EIA CO2 and U.S. Bureau of Economics Analysis GDP data

The fossil fuels and associated carbon emissions required for generating each $1.0 million of U.S. GDP has declined from 8,170 MT CO2 (1949) to about 360 MT CO2 today.  This represents a CO2 reduction of 96% 1949-2011 per $1.0 million GDP.  Since the CBO projects the U.S. current GDP could increase by 230% 2011-2050, what are the odds that the U.S. can reduce its carbon emissions per $1.0 million GDP by an additional 92% in 2050?  Change required for achieving an 80% reduction of the U.S. 1990 baseline emissions.

While many Federal energy regulations have successfully reduced the fossil fuels consumption rates of all End-use sectors, these improvements have been significantly off-set by the growth in overall U.S. population, increased number & use of LDV’s (i.e. vehicle miles traveled; VMT), increased numbers of residences & commercial structures, and a huge expansion of personal electric devices.  With the exception of uncontrollable population growth, the different End-use sectors energy consumptions could be further reduced by different possible Federal actions.  Transportation fuel consumption can be reduced by further increasing CAFE standards up to 100+ mpg (requiring massive compact PHEV/EV fleet expansions), substantially taxing LDV registrations and annual VMT, or following EU motor fuel taxing strategies.  Residential, Commercial and personal electric devices energy consumption could also be reduced by further efficiency upgrade incentives or discouraging demand through implementing new energy/consumption taxes.

The issues of continuously increasing populations, standards of living and related impacts on carbon emissions are yet to be addressed by politicians or the Government.

Recent U.S. Energy and Proposed Climate Regulations – The House of Representatives passed the American Clean Energy and Security Act (ACESA) in 2009.   The Senate did not pass ACESA 2009 or any other alternative climate bill.   ACESA 2009 was proposed to reduce U.S. total carbon emissions up to 83% by 2050 from baseline 2005 emissions.

The probability of ACESA 2009 actually achieving its carbon reduction targets is highly questionable.  Proposed compliance strategies were based on purchasing large amounts of international carbon credits.  This strategy would effectively commit the U.S. to paying large foreign (carbon) taxes with possibly limited reduction in current actual U.S. or world carbon emissions.  Review of Kyoto mechanisms and associated carbon credit markets finds a large percentage of traded/sold credits are based on either past CO2-e reductions or future theoretical CO2-e reductions in the levels of projected increases within Developing countries.  Carbon leakage is another risk factor to the actual value of many carbon credits.

The ARRA 2009 was one of the latest energy related regulation implemented that provided loan guarantees and other financial support to a broad range of renewable energy projects.  Due to numerous project failures the effectiveness of this energy program may not be significant.

Since the Supreme Court gave the EPA the authority to regulate carbon emissions under the CAA, this agency has begun implementing regulations that initially focus on reducing coal consumption.  Many regulatory actions have apparently been deferred until after the recent election.  Effectiveness and costs of future EPA climate related regulations are yet to be determined.

Cheap Carbon Credits: Buyer Beware – Since the Kyoto Protocol and recent ACESA 2009 developments many politicians and special interests have repeatedly advocated that transitioning the U.S. economy from fossil fuels to renewable energy would be ‘affordable’.   After all, what intelligent individual or head-of-household would not support saving the planet for less than 50 cents per day (Re. page 4 “Protection of Customer”).  The problem is that many claimed carbon reduction costs are extremely under estimated (Re. “Costs to Reduce U.S. CO2 Emissions by 62%” section).  Realistic costs to substantially reduce ‘actual’ U.S. carbon emissions will be in the range of $50 - $100 per MT CO2-e. 

In general, only the initial energy efficiency upgrades based on retiring 20+ year old, highly inefficient technologies, or fuels switching should be expected to deliver accurately valued carbon credits significantly cheaper than $50/MT.  In the U.S. and most Developed countries highly inefficient vehicles, equipment and appliances have already been largely replaced-upgraded.  Fuels switching is only economical for those facilities that can be easily modified to burn natural gas.  One should be very suspicious of the true value of carbon credits priced at $10/MT such as those recently traded in EU markets.  These cheap credits are most likely limited-term or of risky-highly questionable value towards actually reducing current world absolute carbon emission levels.

Why Does the U.S. Lack an Objective and Coherent Climate Policy? – Despite not having a formal climate policy the U.S. has made significant progress towards reducing carbon emissions.  While many individuals strongly believe the U.S. must make even more substantial reductions in the future, Congress and the Administration apparently have other priorities such as the economy and growing deficits.

Not prematurely embraced politically popular climate strategies such as carbon taxes and cap-and-trade may be in the U.S.’s best interests.  New carbon taxes are unlikely to be any more popular than past ‘BTU tax’ proposals.  With the current Congressional-President heated negotiations over raising most any taxes and the fact that the Middleclass is not likely to support increasing their average energy costs by at least 5% of their total annual incomes ( Re. ‘Costs to Reduce U.S. CO2 Emissions by 62%’ section), support for any form of energy taxes or increased costs will likely face strong opposition.

For the U.S. to adopt a truly effective climate policy, specific objectives should be well defined.  Most recent and past climate regulatory debate has generally focused on carbon reduction processes (cap-and-trade, allocation mechanisms, or carbon taxes) and not specifically what the policy should be designed to accomplish; controlling and reducing atmospheric CO2-e concentrations in order to mitigate future climate change.  The problem statement for the U.S. has not changed since the Senate rejected the original 1997 Kyoto Protocol; uncontrollable increases in Developing countries carbon emissions. 

Assuming the U.S. were too actually (without foreign credits) reduce its 2005 baseline carbon emissions by 83% in 2050 (6000 MMT/yr. to 1020 MMT/yr.), this would reduce U.S. carbon emissions from about 18% of total world anthropological emissions today to less than 3% in 2050.  However, despite spending many $Trillions in the future and risking the U.S. economy’s long-term health, future world carbon emissions and atmospheric concentration are still projected to continue increasing (Re. ‘Modified World Carbon Emissions Projection – 80% 1990-2050’ graph).  U.S. EIA projections show that Developing countries carbon emissions will grow at rates far greater than the U.S. or other Developed countries can feasible reduce their emissions. 

Recommended Future Climate Policy – The obvious answer to the historic question: “Would an intelligent individual or head-of-household be willing to spend reasonable levels of their incomes to save the planet?” is yes; provided the costs are truly affordable for average citizens and the carbon reduction investments actually achieve quantifiable targets-benefits.  Since the costs are not insignificant as many politicians/special interests advocate, perhaps it’s time to regroup and develop a climate policy that gives the public a more reasonable return on their investment (increased costs-of-living).  Since the likelihood of actually reducing current world total carbon emissions/atmospheric concentrations appears to be relatively low, a more effective U.S. climate policy should possibly focus on actions that have greater probabilities of benefiting the general public. 

An improved climate policy approach could require all future carbon reductions come from real domestic fossil fuel consumption reductions, and all fossil fuel-carbon reductions should initially be based on actions that directly reduce the highest risk U.S. petroleum imports.  This recommended ‘carbon reduction-energy security’ improvement strategy would effectively ‘hedge’ the benefits & risks of reducing U.S. carbon emissions.  The risks of Developing countries or carbon leakage readily off-setting all future reductions in U.S. carbon emissions would be hedged or countered by the benefits of increased energy security such as mitigating the continuing risk of Iran shutting down the Strait of Hormuz.  In addition high priority needs to be placed on ‘adaptation’ to the likely inevitable future increases in global temperatures (Re. Delaware/EPA adaptation plan example).  This generally means relocating-rebuilding all structures at greatest risk to safer (higher) ground.  All at risk shorelines and flood plains should ideally be restored to their nature states for the enjoyment of future generations.

In Conclusion – Many individuals may disagree with the growing evidence that substantially reducing future U.S. carbon emissions can have relatively small or possibly insignificant benefit towards mitigating future atmospheric carbon concentrations and climate change.  With the current state of the U.S. economy should we blindly commit huge resources ($Trillions) to ineffective carbon reduction policy-strategies, and still face probable impacts and potentially enormous costs of future climate related disasters?

The debate on climate change/global warming may be over, but the solutions to dealing with possibly uncontrollable carbon emissions from Developing and some Developed countries warrants much more critical evaluation than many special interests or the Federal Government have completed to date.