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Policy Matters Ohio. Climate Legislation and Jobs : An Overview of Issues and Options February 23, 2010. www.policymattersohio.org. The Science. Explaining the Greenhouse Effect. Figure: www.myclimatechange.net. Warming is unequivocal: clear and unambiguous. - PowerPoint PPT PresentationTRANSCRIPT
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www.policymattersohio.org
Policy Matters Ohio
Climate Legislation and Jobs:
An Overview of Issues and Options
February 23, 2010
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The Science
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Figure: www.myclimatechange.net
Explaining the Greenhouse Effect
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Warming is unequivocal:clear and unambiguous.
Source: IPCC, AR4, WG1, Chap 6, Fig. 10
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One fifth of our CO2 emissions today will remain in the air in 3009
Atmos. Chem. Phys. 7, 2287-2312, 2007
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IPCC TAR SYN SPM Fig 5-2
Stabilization of CO2 concentration, temperature, and sea level takes centuries after emissions are reduced
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Opportunities of the Low Carbon Economy
• Why has China announced it will reduce emissions by 40% below 2005 levels by 2020?
• Transition to a low energy economy by mature and developing nations offers the largest export market in the 21st century.
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The 21st century is about exports
• Demand grows as nations develop.• 40% of European GDP is export driven.• 40% of Chinese GDP is export driven.• 36% of Canadian GDP is export driven.• 11% of US GDP is export driven.• America must claim a place in the
economy of the 21st century! • The low carbon economy will be the
largest market.
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The Dilemma (Ohio’s Opportunity/Danger)
• Over 18% of Ohio’s GSP comes from manufacturing, 50% more than the nation’s share….
• Ohio is the third largest exporter of goods among the states…
• Ohio ranks 5th in the nation for our total energy use
• Ohio ranks second in the nation for the level of pollution emitted by our electric power industry.
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LABOR plays a BIG ROLE
- Refrigeration/HVAC, Water Conservation – UA, Sheet Metal Workers
- Lighting, solar energy, public utilities - IBEW- Weatherization, skylights- Glaziers Union - Roofing & energy efficient materials- Roofers- Insulation, energy efficient framing-International
Association of Heat and Frost Insulators and Allied Workers
- General Labor & Construction, emissions control, hazardous waste, demolition and recycling- LIUNA, IUOE
- Green Building- Ironworkers- Greening the Ports- ILWU, Teamsters- Mass transit- Transit Employees- Cleaner manufacturing – USW, IAMAW, UAW, CWA-IUE, - Public health – AFSCME, SEIU, CNA- Education and career-tech – education unions
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Legislative options on the table• American Clean Energy and Security Act
of 2009 …aka – “ACES” or – Waxman Markey or – Cap & Invest
• American Clean Energy Leadership Act of 2009 … aka “energy legislation”
• Clean Energy Jobs and American Power Act of 2009 …aka– Senate version of Waxman Markey
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More legislative options
• Carbon Limits for Energy and America’s Renewal Act…aka – CLEAR Act of 2010 – Cantwell Collins or– Cap & Dividend
• Kerry-Lieberman-Graham
• Voinovich-Lugar
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www.policymattersohio.org
Policy Matters Ohio
To create clean energy jobs,
achieve energy independence, reduce global
warming pollution and transition to a clean energy economy.”
The American Clean Energy and Security Act of 2009:
September 21,2009
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ACES – Five Titles• Clean Energy (Renewables, Coal
Sequestration, transportation, smart grid, nuclear, State SEED funds, etc.)
• Energy efficiency (built environment, appliances, transportation, neighborhoods, housing, State REEP funds.)
• Global Warming (Cap & Trade)• Transition (energy intensive industries,
consumer protection, climate workers adjustment assistance).
• Agricultural and forestry offsets
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Western Climate Initiative (WCI)
Regional Greenhouse Gas Initiative(RGGI, “Reggie”)
EU Emissions Trading System(EU ETS)
Cap-and-Trade Systems Under Development
Participant
Observer
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Cap-and-Trade Climate Policy• “Cap-and-trade” means a government authority establishes a cap that
limits the total amount of pollution allowed,
and then distributes allowances for “permission to pollute” the global atmosphere, which can be traded as private property.
• The amount of greenhouse gas emissions permitted declines each year, creating demand for a new commodity: carbon permits.
• When offered enough money (or faced with high enough costs), polluters who own permits (or need permits) will reduce their emissions.
• These trades establish a market price for greenhouse gas pollution.
A familiar game can help illustrate the concepts…
Got it?
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Musical Chairs A Helpful Analogy for Managed Scarcity
Each chair represents the “permission to pollute”:
one metric ton of carbon dioxide (1 mtCO2) or an equivalent amount of any other greenhouse gas
If you have an “allowance”, you can have a chair.
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Players: Polluters at Points of Regulation
Oil Refineries Natural Gas
companies
Chemicalcompanies
Aluminumsmelters
PowerPlants
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Cap-and-TradeDeclining Cap
Covered Entities
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Polluters Compete for Scarce Permits
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Carbon Price Established by Market Activity
So, is it more profitable to: buy a permit, OR reduce my own emissions?
Profit opportunities are a main driver for innovation and investment, and the climate challenge needs both.
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Carbon Price Established by Market Activity
Would anyone accept $40 for your permit?
$40
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Moving to Clean Energy
Players seek better options as costs rise.
Cap-and-trade lets players choose at what price they leave the game
– and how they want to make that change.
$30$150$20
$100
$200$50
2050204020302020
Wind power
Rail Transport
Green buildings
Nuclear power
2010
Solar power
Hybrid vehicle
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Carbon Cap vs. Carbon Tax
PriceOn Carbon
Q
P
CarbonCap
Demand
Quantityof Emissions
Q
P
Demand
CarbonTax
Should we set the price and let markets determinethe quantity of pollution?
Should we set the quantity and let markets determinethe price for a scarce resource?
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Emission Allocations: Free versus Auctioned Over Time
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American Clean Energy and Security Act of 2009
• Cap and Trade
• National Renewable Energy Standard
• 85% in Free Allowances
• 15% to cushion lowest income
• CBO estimates annual impact of $175 per household
• Most studies find a somewhat progressive impact
• Includes substantial investment provisions
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Key Job Provisions• 15% for energy intensive industries
• 44% for utilities (Regional equity)
• IMPACT - $30BB to help firms with fewer than 500 employees become energy efficient and retool for new markets
• Production based rebates and border adjustments
• CWAA
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Cantwell Collins (CLEAR* Act)
• Cap and Dividend
• Trade occurs only in the private sector
• 75% goes directly to consumers in a flat rebate to households
• 25% goes to investment
*”Carbon Limits for Energy and America’s Renewal”
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Cantwell- Collins, continued
• Cap is on fossil fuels, not on emitters.
• 99% of firms are not subject to the cap; only sellers of fossil fuel
• 81% of economy covered.
• Border adjustments
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Kerry-Lieberman-Graham
• Specific support for expanded oil and gas drilling
• Specific support for expanded nuclear capacity
• Significant focus on coal sequestration
• Renewables and energy efficiency remain focus
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Voinovich Lugar Proposal???
Proposal would deal solely with emissions from
electric utilities; would address Nox, SO2, CO2
and Mercury. • limit GHG emissions from power plants; • new financial incentives for nuclear power;• carbon capture and sequestration; • energy efficiency mandates for buildings and• stronger corporate fuel economy standards
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The American Clean Energy Leadership Act
• Senate Energy and Natural Resources Committee in June.
• Establishes a Renewable Energy Standard (15 percent)
• allows more oil and natural gas leases in the eastern Gulf of Mexico,
• overhauls federal financing for clean energy projects,
• boosts energy efficiency programs and• Includes new federal authority to site major
electric transmission lines.
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Clean Energy Jobs and American Power Act of 2009
• Looks like ACES but – lacks investment, – Renewable Energy and – emissions allocations.
• Support for nuclear and natural gas as bridge fuels
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Key Issues for Ohio• How to minimize the downside
– Border adjustments– Production based rebates– Regional equity - Protecting household budget
Protecting employers from energy spikes
• How to maximize opportunity– Building a national market– Ensuring domestic content– Access to capital for domestic manufacturers
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Key initiatives to watch
• Senator Brown’s tax credits for domestic advanced energy manufacturing
• IMPACT legislation
• Regional Borrowing Authority
• Regional equity
• Transition assistance – unemployment and training
• Prevailing wage