UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION 1 Misc points re climate policies -- Energy Security,...

UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION 11

Misc points re climate policies -- Energy Security, Benefits to Ag from Legislation, & Impacts on Economy

Kevin Leahy - Managing Director, Climate Policy

Emissions Trading Workshop

Purdue Climate Change Research Center

April 30, 2010

UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION

Climate Regulation is Coming

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Hidden Upside of Climate legislation for U.S. Agriculture

33Apr. 30, 2010

•Offset policies that include international forest preservation boost U.S. ag by putting value on existing forest (otherwise slated for conversion to crops or grazing)•Reflected in higher ag product price projections (small impact on retail food price in rich world) (John Reilly)

Natural Forest (“deforestation” scenario)Natural Forest(Melillo, Gurgel, et al. 2008)

Maps from Tim Searchinger presentation (Princeton)

UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION 44Apr. 20, 2010


The risk for industry

• CAA: If new source has Potential to Emit (PTE) above the Prevention of Significant Deterioration (PSD) threshold, becomes a major source (of pollutant) and potentially subject to PSD permitting requirements. Statute defines major source threshold at 100 or 250 tons/year. (for CO2 emissions -- about $21K of natural gas used/year)

• If move forward with project that emits > 250 tons ($21K/year of nat gas)based on tailoring rule (no air permit), but court vacates rules in future and threshold still 250 tons, you could be held liable for not having obeyed the law – “should have anticipated”• See DC Circuit CAMR decision, 2008

• Who might push this? Local environmentalists/activists? NIMBY issue? Competitor? Anyone with the time and money and an ax to grind against you or your operation.

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Apr. 30, 2010


How much overlap between these two?

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UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATIONUPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION 77Apr. 30, 2010

Carbon capture on coal

Drill baby drill

• Hybrid Electric/Plug in vehicles

• Improve Energy Efficiency

• Long transition times

Energy Security

Climate Change

Overlap is larger than expected, but the two issues not identical

•Each side must compromise•Emissions trading aligns the incentives for both in same direction

•Nuclear• Renewable Energy


Hitting the competitiveness issue

For energy intensive firms or trade exposed, all costs covered by allocation

Updated with production levels – all opportunity, no stick If can reduce, can cash in. If can’t, direct and indirect costs

(electricity price increases) are covered via allocation. Give time to apply pressure to China – remind them of the stick

in the closet (border tax adjustment) This is an approach that could actually encourage production to

stay in U.S. Border tax adjustment on imports from countries with no

climate fee for longer term transition – may be WTO compliant

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The technology future for electricity – EPRI’s 2009 update

0

1

2

3

4

5

6

7

2000 2010 2020 2030 2040 2050

Trill

ion

kWh

per y

ear

0

1

2

3

4

5

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7

2000 2010 2020 2030 2040 2050

Trill

ion

kWh

per y

ear

Demand with No PolicyCoal

Retrofit

New CCS

Gas Nuclear

Hydro

Wind Solar

Oil

Demand Reduction

Biomass

Coal

Gas

Wind

Demand Reduction

New Coal + CCSCoal

Gas

WindNuclear

Demand Reduction

Nuclear

Limited Portfolio Full Portfolio

Solar

Biomass

Hydro

CCS Retrofit

Biomass

Hydro

Apr. 30, 2010


NAM’s Analysis of Climate Legislation (House passed version) “U.S. jobs decline by 1.8 million under the low cost case and by 2.4 million under the high cost

case” “would impose a financial cost on households of $118 to $250 by 2020 and $730 to $1,248 by

2030” “reduce U.S. Gross Domestic Product (GDP) by between $419 billion and $571 billion by 2030

GDP falls by 1.8% under the low cost case and by 2.4% under the high cost case in 2030.”

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Source: NAM/ACCP Economic Impact of Waxman Markey Bill -- http://www.accf.org/media/docs/nam/2009/National.pdf

Apr. 30, 2010


Heritage Foundation’s Analysis of Waxman Markey

Apr. 30, 2010


Same NAM analysis with more complete context

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Answer: NAM – using same dataset used for previous page’s graphs.Source data: http://www.accf.org/media/dynamic/3/media_381.pdf, page 5

Apr. 30, 2010


Heritage just another organization overwhelmed by optimism?

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Empl

oym

ent (

1000

s)

GDP

(billi

ons

$)

Source for above data: Heritage Foundation analysis of Waxman Markey -- http://www.heritage.org/research/energyandenvironment/images/CDA-waxman-markey-appendix-table-2_1.gif

Apr. 30, 2010


The long and the short

Enhanced Energy Security and lower CO2 emissions are compatible policy objectives & can efficiently use the same market mechanism

Must have an “all the above” mentality when considering energy

Beware those projecting economic collapse or “no costs” proclamations

There will be a costs, but should be affordable – most existing capital stock still good (manufacturing and vehicles)

The economy still grows throughout the transition Year on year price changes should be small but with clear

upward trend for future

1414Apr. 30, 2010

UPDATE ON NUCLEAR PLANS AND CARBON LEGISLATION 1 Misc points re climate policies -- Energy Security,...

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