On September 26, the State Department released a draft of the 2014 “Climate Action Report” for public comment. The government publishes such a report every four years in deference to the UN Framework Convention on Climate Change (UNFCCC). These Climate Action Reports have always projected greenhouse gas emissions under existing policies, but for the 2014 draft, for the first time the government is also including projections contingent on planned future policies. In this post, we’ll focus on just one of several problems with the report: In order to achieve its planned emission cuts, the government makes unrealistic assumptions about changes in the energy sector. The only way these cuts will work is through large energy price hikes and/or a drop in energy consumption by Americans. What makes the analysis difficult is the lack of transparency in the government analysis.
Under Status Quo, Thank Fracking and the Recession for “Green” Outcome
The government’s own analysis of the situation through 2020 is amusing enough to quote here, since it implicitly admits that none of the “green” federal policies enacted to date can take any credit for near-term emission reductions:
Given implementation of programs and measures in place as of September 2012 and current economic projections, total gross U.S. GHG emissions are projected to be 4.6 percent lower than 2005 levels in 2020. Between 2005 and 2011 total gross U.S. GHG emissions have declined significantly due a combination of factors, including the economic downturn and fuel switching from coal to natural gas (U.S. EPA 2013). Emissions are projected to rise gradually between 2011 and 2020. Emissions are projected to remain below the 2005 level through 2030, despite significant increases in population (26 percent) and GDP (69 percent) during that time period. [2014 Climate Action Report, Executive Summary (pdf), bold added, page 3, line numbers omitted.]
Re-read the above carefully: From 2005 to 2011, total gross greenhouse gas (GHG) emissions declined significantly, mostly because of the recession and the natural gas boom. As the report itself says on page 2, “A major contributor to the decline in U.S. GHG emissions has been the displacement of coal with natural gas that is extracted from shale rock formations through hydraulic fracturing and horizontal drilling.”
However, given federal policies that were in place as of September 2012, the government says that emissions “are projected to gradually rise from 2011 through 2020.” That means that the modest reductions in projected 2020 emissions relative to 2005, are already with us, and they resulted from economic forces, not from government policies—except insofar as the Bush and Obama Administrations made the recession more painful and longer than it needed to be. Going forward, these reductions will be frittered away.
Thus, the government’s own report shows that nobody should be patting himself on the back for “green” policies and how they’re helping curb GHG emissions—what modest reductions they are projecting, have nothing to do with “green” policies. At best, Administration officials can say, “The recession and ‘fracking’ boom have reduced greenhouse gas emissions far more than anything we have done. However, our contribution is that we have put in place measures that limit consumer choice and make electricity artificially more expensive, in order to slow the growth in emissions from 2011 going forward, relative to what otherwise would have occurred. So we are helping to lock in the emission reductions given to us by the recession and the natural gas industry.”
More Aggressive Reductions With Future, Vaguely Specified Policies
To recap our discussion from above: With the federal policies in place as of September 2012, the government’s own report says that GHG emissions in 2020 will be a mere 4.6 percent lower than in 2005, but that all of this gain had already been achieved by 2011, due to the recession and natural gas revolution. (Note that according to EIA data, between 2005 and 2012, carbon dioxide emissions—which are one component of total GHG emissions—were reduced by 12 percent.) From 2011-2020, according to the U.S. Biennial Report, the absolute level of GHG emissions is projected to increase, meaning (of course) that the reduction relative to 2005 levels keeps shrinking over time.
This is not what the champions of green policies want to tell their environmentalist supporters. Never fear, the related U.S. Biennial Report spells out how the Administration can achieve 17 percent GHG reductions in 2020 (relative to 2005 levels), if we tweak some assumptions. In their words:
The administration is already hard at work implementing The President’s Climate Action Plan. Moreover, we are not starting from zero; all of the actions outlined above are grounded in existing authorities and build on policies and programs already in place. Many of the specific measures that scale up and expand existing efforts are already underway.
However, several of the actions will require U.S. government agencies to develop recommendations, propose new rules, augment existing activities, and undertake processes that entail significant stakeholder outreach and public comment before final rules and programs are in place. Although the purpose of each action is clear, the exact shape and details of each will be developed over time. Until recommendations, rulemakings, and other administrative activities for these specific actions are complete, it will not be possible to estimate the exact scale of emission reductions that will be achieved by each specific action.
Nevertheless, at this early stage, the potential range of GHG reductions achievable by 2020 toward the ultimate goal of achieving economy-wide emissions reductions in the range of 17 percent below 2005 levels can be assessed. Light can be shed on the potential scale of additional reductions through 2020 by assessing the broad categories of actions contained in the plan, using integrated models to the extent possible to ensure no double counting of reductions within each category. [U.S. Biennial Report (pdf), page 12, bold added, line numbers removed.]
To paraphrase: Under policies that were in place as of September 2012, GHG emissions in 2020 will only be 4.6 percent below 2005 levels. Yet the Administration wants to show it has ways of getting that number to a 17 percent reduction. Yet the report can’t be too specific, since these policies don’t yet exist. In the following section, we’ll focus on just one of the areas—energy—where the analysts see big emissions reductions in our future.
“Ve Have Vays of Reducing Energy Emissions”
After the quotation provided above, the Biennial Report explains the additional emission reductions on the table in the energy sector:
Energy CO2—Estimates for energy CO2 are based on a range of potential actions, including increasing levels of clean electricity generation, extension of energy efficiency standards and regulations affecting residential and commercial buildings, and enhanced measures addressing industrial efficiency and transportation. Although these estimates do not explicitly measure projected emission reductions from specific rules, standards, and other efforts laid out in the Climate Action Plan but not yet implemented, they do provide a range of potential reductions that can be achieved across the relevant sectors (see Biennial Report Methodologies Appendix for further information). As reflected in Table 2, this analysis shows that, taken together, additional actions across the energy sector have the potential to reduce CO2 emissions by an additional 485–800 Tg relative to 2012 policy baseline or, equivalently, to reduce emissions from 2005 levels by an additional 8–12 percent. [U.S. Biennial Report, page 12, bold added, line numbers omitted.]
Thus the government’s analysis claims that the September 2012 policy baseline would have GHG emissions only 4.6 percent lower than 2005 levels by 2020 (and those gains are already here, and will shrink going forward), but their plans for the energy sector alone would wring up to a 12 percent additional reduction. It’s worth asking: How exactly do they plan on achieving such a large movement in the next seven years?
The Most Opaque Administration in History
At this point, we hit a problem: Even looking at the methodological appendix to the Biennial Report, it’s not clear how further changes to the energy sector are supposed to contribute an additional 12 percent reduction in 2020 GHG emissions. A major part of the problem is that in the appendix, the savings are displayed in terms of end-use sector (Buildings, Transportation, and Industry) so we can’t distinguish between emission reductions coming from electricity generation (by shifting from coal-fired plants to natural gas or nuclear, for example) versus a reduction in consumption (by imposing stricter efficiency standards on vehicles and buildings, for example).
In any event, the appendix’s more aggressive Scenario 2 “achieves 62% clean generation by 2020.” To give a frame of reference, for the first half of 2013 EIA data suggests the US is about 47% “clean”—which is defined as nuclear, renewables, and a half-credit for natural gas. So how is the electricity generation sector supposed to go from 47% “clean” to 62% “clean” in a mere seven years?
Clearly, this can only occur with massive changes to the generating sector, mainly through replacing a large number of existing coal-fired power plants with new natural gas and renewable plants. Fitting all existing coal-fired plants with expensive carbon-capture technology is not feasible since the carbon capture technology is not yet commercially available and because most existing coal-fired power plants were not constructed to be reconfigured with this technology even if it were commercially available. There is also not enough time to install new nuclear plants due to their large lead times for permitting and construction.
Replacing existing low-cost coal-fired power plants with new natural gas and renewable plants will raise electricity prices since the cost of running many of the existing coal-fired power plants is just their production cost, which averaged 3.27 cents per kilowatt-hour in 2012. According to EIA, building new natural gas-fired plants, will cost twice that amount, new wind turbines will cost over 2.5 times as much (and still require back-up power), and building new solar plants will cost 4.4 times as much.
At the very least, the “most transparent Administration in history” should spell out exactly how much electricity will be produced in its “optimistic” 2020 forecast, with which technologies, and at what price to consumers. It is difficult for outsiders to assess these projections, because (as the appendix says in a footnote on page 1) the computer simulation underlying the projections “uses a version of NEMS that differs from the one used by the U.S. Energy Information Administration (EIA),” and that consequently the “results described in this report do not necessarily represent the views of EIA.”
As so often happens in the climate policy debate, the federal government (thankfully) is not willing to enact transparent and draconian measures that will actually achieve outcomes that many environmental activists desire, because the public backlash would be too intense. Nonetheless, it is important for policymakers and the citizenry alike to receive accurate and specific information on the assumptions underlying the government’s plans for the future. If their promises rely on impossible changes in electricity generation, and/or massive hikes in the price of energy, Americans need to know before continuing down this route. On that score, this document is terribly deficient, and consequently, the Administration is misleading either the United Nations, the American public, or—most likely— both.