+ Capstone: GCC Class 19: Costs & Stability POLS 405 Spring 2011 Fisher

+ George Latsky, “Carry the One” Carry the one

+ Part I: Costs of GCC

+ Introduction Efforts to mitigate GHG emissions will require investments in new technology – entailing costs to society Addressing cost is essential in ensuring broad participation full commitment Costs are perceived differently – willingness to bear costs more of politics than economics Cost minimization integral in architecture of KP – inclusion of market based mechanisms (ET, JI CDM)

+ Stern “If we start now and plan carefully, the costs of achieving low- carbon growth will be modest relative to the risks avoided” Jeroen Van der Veer (Shell’s former CEO): “easy oil and gas— that is, fuels that are relatively cheap to produce and very easy to get to market—will peak somewhere in the coming ten years…it is the end of the ‘easy oil’ era” So, problem is two fold: one, continued use of fossil fuels will be increasingly expensive and will run out within a Century, but also, two, the use of hydrocarbons is creating GHG pollution that is driving global warming

+ Emissions Equivalent CO2 ppm Amount of CO2 in the global atmosphere Current global levels at 390 ppm CO2e ppm Amount of the equivalent of CO2 in the global atmosphere Accounts for GWP (global warming potential) of all GHGs Current global levels at 440ppm

+ Differentiating Emissions Emissions Peak: The year in which total global GHG emissions reach their highest levels. Net Total Emissions: anthropogenic emissions (AE) plus natural emissions (NE) minus sequestration (S) NTE = (AE + NE) - S Emissions Stabilization: the level at which GHG concentrations are stabilized the climate system To stabilize requires GHG to reach a peak and then decline sharply for decades (as long as a century) prior.

+ Evaluating Targets Bulk of science says that anything above 2°C additional warming could have serious consequences (exceeding key tipping pts) and to accomplish this, emissions must peak between Currently at 440ppm CO2e, rising 2.5ppm/yr Puts us at 455ppm by ppm by 2025 and 537ppm by 2050 current levels). Stern suggests 500ppm CO2e as a sufficient balance of cost/benefits of mitigation To stabilize, emissions would have to peak 550ppm in about 15 years For 500ppm in about 10 years For 450ppm now

+ Concentration Levels & Temperature (at equilibrium) Stabilization Level (ppm CO2e) 2°C3°C4°C5°C6°C7°C 45078%18%3%1%0% 50096%44%11%3%1%0% 55099%69%24%7%2%1% %94%58%24%9%4% %99%82%47%22%9%

+ Meeting Targets To meet a goal of 500ppm CO2e by 2050, would require reducing absolute GHG flows by 50%+ from 50Gt to about 20Gt. World economic growth augments this figure. Given world output 2.5% requires 80% cuts (from today) 2 areas for quick, cost-effective reductions: Deforestation: 18% of emissions, 50% from Brazil and Indonesia Energy Efficiency: Across all sectors 40% of ALL emissions come from electricity and transportation With $75/barrel (coal/gas equiv) & Carbon price of $50/ton CO2, then wind and CCS Coal are competitive With $150/barrel wind is competitive without a carbon price IEA est cots of oil at $100/barrel rising to $120 over next decade Obviously, political & social realities must be considered (e.g. China and its immense coal capacity)

+ Rapid Change Possible With tight, focused policy change can be rapid France went from <1% to 75% of power from nuclear in less than 20 years Germany has expanded renewables to 14% of total energy today, with plans of 30% by In So Cal, 44% of electricity is ALREADY renewable Fuels in transportation Renewable electricity (& eventually zero carbon electricity) can provide zero carbon road transport (electric & hybrid vehicles) Batteries will be become smaller (nanobatteries) with more capacity and fewer enviro consequences Aviation  big problem. Currently 3-4% of emissions, but IPCC says could rise to 15% by Biofuels could reduce GHG emissions here by 60-80%, and hybrid fuels can be as good now  but serious consequences from water, land and soil (for corn/sugar) 2 nd Gen biofuels, created from waste and marginal land, will be KEY

+ Stern’s 4 Keys to Meeting GHG Targets 1. More efficient use of energy 2. Halt deforestation 3. Put existing technology to work quickly (e.g. wind, solar, hydro, geothermal, and nuclear) and in short term use CCS for coal and gas 4. Invest in new technologies for the medium horizon (e.g. efficient & cost-effective solar, nanobatteries, enhanced photosynthesis, 2 nd /3 rd gen biofuels, nuclear fusion, etc)

+ Consequences of Meeting Targets 1. Avoid dangerous effects from global warming and GCC 2. clean energy = massive reductions in air and water pollution 3. aids in cleaner domestic pollution (from cleaner cooking fuels), which is significant prob in developing world 4. Stopping deforestation protects biodiversity, increases water retention, prevents soil erosion, & effects from extreme events 5. Stopping deforestation enhances SINKS 6. More secure energy, brings global political/econ stability 7. Increases nat’l security, since  domestic energy security 8. Increased 2 nd gen biofuels can be shared globally 9 provides individual security  energy indep households 10. Increase innovation, new techs, and boost global economy

+ Costs of Meeting Targets Starting at 430ppm CO2e, to stabilize at 450ppm, requires peak immediately and fall 7%/yr for 2 decades. To stabilize at 500ppm Co2e requires a peak in 15 years, falling 3%/yr To stabilize at 550ppm CO2e requires peak in 20 years, and cutting 2-3%/yr. Stern: costs of implementing measures to combat increases in GHGs can be limited to about 1% of (GDP) each year until This cost could be even lower if there are major gains in energy efficiency or if the co-benefits (e.g. reduced air pollution, increased health benefits, etc.) of various mitigation options are measured.

+ Evaluating Targets: Putting it all Together Stabilizing Target CO2e Must Peak in Reduction in 2050 compared to 2000 GHG Decline After Peak (per year) Likely Range of  Temp Cost (Global GDP/yr for 50 years) 450ppmNOW- 80%7% °~3-3.5% 500ppm10-15 years- 55%3%2-3.25°~2% 550ppm15-20 years- 20%2-2.5% °~1% 600ppm25 years+15 %~1.5%3-4°~ % ** currently at 430ppm CO2e

+ What should the targets be? To stabilize at 500ppm would cost 2%GDP/yr but will reduce the possibility of global temps exceeding: 5°C from 50% to 3%. 4°C from 80% to 10% 3°C from ~100% to just under 50% Question of Where? At 550ppm would cost just over 1% Global GDP/yr, but will reduce possibility of global temps from exceeding: 5°C from 50% to 7%. 4°C from 80% to 25% 3°C from ~100% to just under 70%

+ Part II: McKinsey and Wedges

+ McKinsey Abatement Costs in US These strategies would require only 1.5% of the real investment expected in the U.S. economy from 2009 to This cost effective reduction is possible because 40% of the avoided emissions would result in negative cost -- meaning that overall they do not cost money, but end up saving money. Substituting inefficient traditional lighting with more advanced technologies, such as Compact Fluorescent Lights (CFLs) and Low Emitting Diodes (LEDs), in homes and businesses can save up to $20.8 trillion. Increasing the efficiency of electronic equipment, such as personal computers, office equipment and home entertainment systems, can save up to $11.6 trillion. Improving building efficiency for new and retro-fitted buildings, for example by improving insulation, reducing the loss of heated or cooled air from walls, doors and windows and adding reflective roof coatings, can save up to $2.5 trillion.

+ McKinsey Cost Abatement Globally To stabilize atmospheric concentrations of CO2e between 450 parts per million (ppm) and 500 ppm by 2030 is feasible using technologies that are available now, and would be achievable for under €40/ton avoided CO2e. 25% of this abatement is achievable at negative marginal cost, meaning that investing in these options would save money over time

+ Stabilization Wedges Graph of next 50 yrs of global emissions of CO2, the difference between the business as usual scenario (doubling of CO2 Pre- Industrial) and the flat path forms a triangle. This triangle is known as the stabilization triangle, which is divided into seven stabilization wedges Each represents different measures that must be taken to reduce emissions. If goal is to reduce emissions by 14Gt by 2060, requires 2Gt in each wedge.

+ 15 Wedge Strategies 1. Efficiency (4 strategies) 2. Decarbonization of power (5 strategies) 3. Decarbonization of fuel (4 strategies) 4. Forest and agricultural soils (2 strategies

Wedge Stabilization Approach

+ Efficiency and Transport (all equal 1 wedge or 1gt CO 2 ) 1. Double vehicle fuel economy (30 to 60mpg) 2. Cutting distance driven (per car) in half (how in US?) 3. Energy Efficient Buildings, Appliances & lights CFLs would represent 1/3 wedge by itself Reduces emissions by 25% (2 wedges, but 1 assumed in BAU) 4. Improved efficiency of Coal-fired power plants  40% to 60% efficiency (up from 32% today) Cutting by 50% the energy lost from fossil fuel extraction, processed and delivered

+ Renewable Energy (all equal 1 wedge or 1gt CO 2 ) 5. Wind: 50 Fold Expansion in Wind Energy Requires adding 2 million wind turbines (1mgw) up from 30k today (replacing coal). To meet this target, wind energy would have to increase by only 8% yr (today it’s increasing by 30%/yr) 6. Wind (H2): New market Add 4 million turbines to generate H 2 for fuel cells (but need infrastructure) 7. Solar: 700 fold expansion of PV solar technology Would have to expand by 14%/yr (today, it’s 30%/yr) Cover an area size of NJ, but can be put on buildings Drawbacks: Current high cost of PV production 8. Biofuels: 50 fold expansion in Ethanol (displacing gasoline) Requires size of India (far more than wind/solar)  15% more land than is currently used today for agriculture; also, undermines biodiversity and food issues 9. Halt Deforestation (& reforestation on non-forested land) Also, requires doubling current rate of reforestation; but runs counter to #8 biofuels 50% of deforestation in Brazil and Indonesia (Brazil: $1b/yr in lost revenue) 10. Conservation Tillage (all cropland) Avoiding ploughing  currently less than 10% of cropland globally Drawbacks: Can never til. Quality of crops? Organic farming requires extensive tillage.

+ Replacing Coal (Decarbonization) (all equal 1 wedge or 1gt CO 2 ) 11. Nuclear: Triple energy now generated by nuclear Requires 700 1gw plants and maintaining those in use now Drawbacks: waste, terrorism & proliferation 12. Fuel Shift to Natural Gas: from coal to natural gas  quadrupling use of natural gas 13, 14, 15. Sequestration (3 wedges): capturing carbon and storing it (CCS) 3gt by 2054, providing 3 wedges 1 from standard coal plants 1 from synfuel plants (which generate synthetic fuel from coal)  although this actually  CO2 emissions without CCS 1 from hydrogen plants that draw on coal  lack current infrastructure.