There are eight options employed in the Low-Cost Scenario for GHG emissions reductions. These are:

The electric generation related options were discussed in yesterday’s article.

Transportation: Addressing GHG Emissions and the Evils of Oil

Addressing oil/gasoline related GHG emissions also addresses America’s “addiction to oil,” as President Bush called it in his 2006 State of the Union Address. There are many problems, potential problems and risks related to the use of oil that has to be imported from unstable and unfriendly. These are referred to here as the “Evils of Oil” and include:

 

• Terrorism: oil funds terrorism;
• Two wars in Iraq;
• The potential for future oil-related wars with countries such as China, Iran, Venezuela;
• High gasoline prices, and the resulting adverse impact on the consumer;
• Volatile gasoline prices;
• The possibility of long lines at gas stations if shortages develops, which could lead to demands for action;
• Israeli-Arab tension, terrorism and the possible escalation to the use of the “oil weapon”;
• Foreign policy limitations;
• Inflation, recessions, high interest rates and housing market impacts, and other macro-economic impacts;
• Economic hardship, especially for low-income families; and
• Air pollution.

Thus, addressing transportation-related energy usage for climate change reasons is just one of the many reasons that this sector should be addressed.

5. Ethanol

Ethanol is a key component of the reduction of transportation related usage of oil and its related emissions. Like other aspects of this Low-Cost Scenario, implementation of ethanol is already underway. Ethanol is currently cost-competitive with gasoline and ethanol plants are being built at a rapid rate. The Renewable Fuels Association reports that there are 101 ethanol plants in operation with 42 more under construction as well as expansions at 7 facilities. Total capacity is currently 4.8 billion gallons of ethanol per year with an additional 2.9 billion gallons per year under construction.(1)

This scenario includes ethanol production growing from today’s 4.8 billion gallons to about 46 billion gallons of ethanol in 2030. This 2030 level is based on analysis by the National Renewable Energy Laboratory of a realistic amount of ethanol that could be achieved by 2030 given land constraints and technological progress.(2) In calculating the impact of ethanol on gasoline, the ratio of the heat content of the fuels is applied. Thus, the 46 million barrels per day of ethanol is reduced to the equivalent of about 33 billion gallons of gasoline (about 2.2 million barrels per day).

This is a conservative compared to the Department of Energy’s 2030 goal of 60 billion gallons of ethanol equivalent.(3) DOE’s goal requires aggressive land development and technological advancement, and offers upside opportunity for this GHG emissions reduction scenario. DOE’s goal and the 46 billion gallons of ethanol in 2030 included in this Low-Cost Scenario can be compared with the 14 billion gallons in the Global Insight GHG Scenario and 12 billion gallons in AEO 2006.

6. Corporate Average Fuel Economy Standards (CAFE)

Higher CAFE standards are a critical component of a program to reduce emissions that cause global climate change. CAFE is also an essential weapon in the war on terror and a method to reduce the high energy prices that costs American consumers tens of billions of dollars every year.

The fuel economy standards used here are 40 miles per gallon (mpg) in 2014 and 50 mpg in 2020. Automakers can reach these requirements any way they please, but the CAFE standards used here were developed as a way to encourage the production of plug-in hybrid vehicles. The 40 mpg and 50 mpg values are calculated using a proportion of plug-in hybrid vehicles (which have an assumed 100 mpg). The 40 mpg standard includes a 20% improvement in conventionally-powered cars to 33 mpg and 10.5% plug-in hybrids. The 50 mpg standard is calculated assuming a 30% improvement in conventionally-powered cars to 36 mpg and about 22% of new vehicles being plug-in hybrid vehicles at 100 mpg. (The electric generation required for the plug-in hybrid vehicles is added back into the electric modeling in this study.)

A significant, and undoubtedly controversial, part of this Low-Cost Scenario is that light trucks and SUVs would be required to meet the same CAFE standards as cars. Large numbers of low-mileage trucks and SUVs are not compatible with the requirements of climate-change emissions reductions. This does not mean that individual trucks and SUVs would achieve 40 mpg or 50 mpg. The primary approach to meeting these CAFE standards would be to use education, marketing, pricing, and incentives to convert buyers from big trucks and SUVs to smaller trucks and SUVs and to cars. It would obviously still be possible to sell some trucks and SUVs and offset these with higher mileage vehicles, but the proportion of big trucks and SUVs will need to change. This change may mean that American automakers would require some form of economic assistance.

The 50 mpg for both cars and light trucks in the Low-Cost Scenario in 2030 compares with 50 mpg for cars and 37 mpg for light trucks in the Global Insight GHG Scenario. AEO 2006 uses 34 mpg for cars and 26 mpg for light trucks in 2030.

7. Other Transportation and,
8. Residential, Commercial and Industrial Energy Efficiency

Other transportation consists primarily of freight trucks and planes as well as smaller uses such as trains, busses, ships, pipelines and military use. Residential, commercial and industrial energy use includes of non-electric direct use of energy such as natural gas and oil for space and water heating and fuel for cooking and process hot water and steam.

With apologies, specific emission reduction options have not been developed for these sectors. Emissions from these sectors are reduced by 25% in 2030 and phased in over time. This reduction is conservative compared to reductions of 40% or more where specific programs are developed.

Results

Emissions in this Low-Cost Scenario are reduced to approximately 4,500 million metric tons of CO2 by 2030. This is a reduction of approximately 44% from the base case (which is EIA’s Annual Energy Outlook 2006). Emissions are reduced by 3,600 million metric tons of CO2 in 2030. This reduction compares with the goal of 24 million metric tons of CO2 in the Northeast States Regional Greenhouse Gas Initiative (RGGI) and 174 million metric tons of CO2 in California’s new program (though in different years).

The sources of the greenhouse gas emissions reductions are summarized in Figure 3. Overall, reductions in emission from electricity generation account for 50% of the total reduction, transportation accounts for 35%, and residential, commercial and industrial reductions represent 15% of the total reduction. The largest single source of emissions reduction is the corporate average fuel economy (CAFE) standards at 24% of the total emissions reduction. The second largest source of emissions reduction is from additional renewable generation at 19% and new nuclear units are third at 17% of the total GHG emissions reduction. Carbon sequestration at coal-fired power plants accounts for about 9% of the total emissions reduction. The extensive amounts of nuclear and renewable generation reduce coal-fired generation in a more cost-effective manor than incurring the expense of sequestration.

Conclusions

The first and most important conclusion is that it is possible to develop scenarios that substantially reduce greenhouse gas emissions without adverse impacts on the economy or on utility customers.

Secondly, it is possible to turn around America’s greenhouse gas emissions and have declining emissions in the long term.

Every major source of emissions needs to be addressed in order to achieve a significant overall emissions reduction, such as that envisioned by the Kyoto Protocol. Large emissions reduction cannot be achieved if important emission sources are not addressed.

This scenario provides a benchmark with which to evaluate other GHG emission reduction programs. This scenario indicates the emissions reductions that can be achieved at low cost. Proposals that call for deeper emission reductions or for earlier emissions reductions need to be compared with this Low-Cost Scenario if they have significantly greater costs.

Today’s high energy prices mean that more emissions reduction options are now cost-effective compared to a few years ago.

These cost-effective options include nuclear power plants, renewable generating technologies, energy efficiency and ethanol. On a somewhat separate basis, new corporate average fuel economy (CAFE) standards might be also called “cost-effective” because they are mandated.

Achieving the targeted emission reductions without adversely impacting the economy or utility customers may require further incentives. This could include long-term incentives for renewable generation, nuclear generation, carbon sequestration at coal-fired plants, and ethanol production, as well as possible incentives for automakers to switch to more fuel efficient vehicles.

From the viewpoint of a federal legislative agenda, this analysis demonstrates that the most important federal legislation is the adoption of new Corporate Average Fuel Economy (CAFE) standards. CAFE standards have the single largest impact on GHG emission reductions and are also important in reducing America’s dependence on oil. The federal legislation with the second largest impact is a national renewable portfolio standard. Renewable generation technologies have the largest GHG emissions reduction impact among the electric generation sector. The emissions reduction from renewable generation is larger than that from nuclear generation, carbon sequestration at coal plants and energy efficiency. There is a large drop off from these two legislative options to any other legislative option. Other legislative action could include incentives for specific options, such as ethanol, nuclear, renewable generation or energy efficiency. Once the specific option has been identified, it is easier to determine what legislative steps and incentives are needed in order for the option to achieve its goal.

The opinions expressed here are solely those of the author and do not reflect the position of any other organization.

References:

(1) http://www.ethanolrfa.org/

(2) Sheehan, John, Tackling Climate Change in the U.S.: The Potential Contribution from Biofuels, Solar 2006 Conference, July 12, 2006

(3) U.S. Department of Energy, Breaking the Biological Barriers to Cellulosic Ethanol: A Joint Research Agenda, DOE/SC-0095, June, 2006, p. 4.

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