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ENERGY FUTURES INITIATIVE

The Green Real Deal A FRAMEWORK FOR ACHIEVING A DEEPLY DECARBONIZED ECONOMY

August 2019

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ENERGY FUTURES INITIATIVE

THE CRISIS: TURNING AMBITION INTO ACTION

The threats posed by to the world, our nation, and our way of life present an unprecedented and urgent challenge. Subnational entities have adopted aggressive carbon reduction targets and public support is mounting for climate action in the . In this context, a coalition-building and pragmatic strategy is needed—one that minimizes costs, maximizes economic opportunities, accelerates solutions, and promotes social equity—to translate climate mitigation ambitions into action. This is The Green Real Deal—A Framework for Achieving a Deeply Decarbonized Economy. The —and Support for Action—is Growing We are becoming increasingly aligned on the moral, social, environmental, and economic imperatives of addressing climate change. A Gallup poll earlier this year showed that 44 percent of U.S. adults said they care “a great deal” about climate change, up from 25 percent in 2011.1 Sixty-nine percent are “somewhat worried” according to a 2019 Yale/George Mason survey. A recent poll by Luntz Global Partners showed that young people are overwhelmingly committed to climate action across political divisions and are calling for political accountability.2

It is not surprising that Figure 1 support for action on climate change is growing: its Temperature Differences Between 2018 and 1980-2010 impacts are becoming AverageFigure X. Temperature Differences Between 2018 and 1980-2010 Average increasingly visible, as seen in the record temperatures in (108.7°F), London (101°F), and Anchorage (90°F) in July 2019; temperatures in Anchorage this July were 15 to 20 degrees above average.3 The UN’s 2019 Climate Action Summit brief noted that “The last four years were the four hottest on record, and winter temperatures in the Arctic have risen by 3°C since

1990” (Figure 1). Arctic sea 20152015-2018-2018 werewere thethe four hottest hottestyears yearson record on record.. Orange Orangeshaded locations shadedwere locationsabove ice volumes in September wereaverage aboveoverall averagein 2018 overall, blue shaded in 2018areas were andbelow blueaverage shaded. areas were below 2018 compared to 1979 average. Source: The Weather Channel, 2018 https://weather.com/news/climate/news/2019-01-08-2018-global-temperatures-fourth-warmest-climate-change have declined by 75 percent.4 Climate scientists have also expressed growing concerns about climate “tipping points”—irreversible changes in the with uncertain triggers—after record- high global emissions in 2018.

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The growing intensity and frequency of floods, hurricanes, and across the country and the world have underscored both the ferocity and costs of a changing climate. The recent in California offer a case in point: 12 of the state’s 15 largest wildfires have occurred since 2000 and estimates of costs of a single fire—the 2018 Camp Fire— are as high as $16.5 billion.5 While Earth has seen major climate variation over its history, the pace of change today is well beyond that attributable to natural phenomena and is driven by human activity, especially from energy. These trends are consistent with decades of forecasts and predictions. A warning on the costs of prolonged inaction is found in the Fourth National Climate Assessment, whose contributors include representatives from eleven Cabinet-level agencies, NASA, USAID and the National Science Foundation. This Assessment highlights extremely high costs of inaction on climate change to the U.S. economy:6 [R]ising temperatures, , and changes in extreme events are expected to increasingly disrupt and damage critical infrastructure and property, labor productivity, and the vitality of our communities. Regional economies and industries that depend on natural resources and favorable climate conditions, such as agriculture, tourism, and fisheries, are vulnerable to the growing impacts of climate change…continued warming…without substantial and sustained reductions in global emissions is expected to cause substantial net damage to the U.S. economy throughout this century…annual losses in some economic sectors are projected to reach hundreds of billions of dollars by the end of the century—more than the current (GDP) of many U.S. states. The Assessment indirectly underscores the social equity dimension of climate change: the high costs of inaction are disproportionately borne by those who can least afford them. These costs should be considered in the context of the Paris Agreement’s targets of a 2°C increase in global temperatures by 2050, as well as its more desirable target of 1.5°C increase. The difference between the two targets comes with very significant consequences. According to the European Geosciences Union, “the additional 0.5°C would mean a 10-cm-higher global sea-level rise by 2100, longer heat waves, and would result in virtually all tropical coral reefs being at risk.”7 In short, every tenth of a degree matters in the fight against global warming, no matter where we are in our progress to limit the rise of global temperatures. Concerns about tipping points also reinforce the need for an additional focus on the “tenth of a degree” solutions and contributions: any and all incremental carbon reductions, whether above or below the multinational targets, reduce the risks of the most catastrophic impacts from global warming caused by Earth’s feedback loops.8 Clearly, we are in a climate crisis. Global Efforts are Falling Short The post-Paris policies of the world’s largest carbon emitters—the United States, China and the —are not aligned with the Agreement’s target of limiting temperature increases to 2°C by midcentury. In fact, after declines in the previous three years, U.S. greenhouse gas (GHG) emissions rose in 2018 at a historically high rate.9 The UN Secretary General Antonio Guterres was quoted as saying in December of last year, "We are in deep trouble with climate change."10 Concerned about these trends, he

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recently sent a letter to all heads of state asking them to provide details at the UN’s climate action summit this September on how they can increase the ambition of their emissions reductions targets for 2030 and achieve net zero emissions by 2050. It is now both clear and urgent: stronger commitments and more effective responses are needed by the U.S. at a time when the current administration is rolling back existing policies and actively undermining efforts by subnational entities to address climate change. Fortunately, in the absence of constructive federal action—and in many cases in the face of significant federal obstructionism—a range of subnational entities including states, counties, cities, faith-based organizations, businesses, and academic institutions have committed to doing their part to help meet the U.S. commitments under the Paris Climate Agreement (Figure 2). These entities however all have different goals, measures, timelines, and policy drivers underscoring the difficulty of achieving ambitious economywide targets absent a coherent and inclusive strategy. Such a strategy is needed to harness and align state, regional, and local solutions.

Figure 2 Subnational Entities Committed to the Paris Climate Agreement

States (21)

Cities and Counties (141) Businesses and Investors (1,361)

Faith-Based Organizations Higher Education (589)

Alaska Puerto Rico Hawaii Subnational entities that have committed to upholding the Paris Agreement targets through the “We Are Still In” pledge. Source: Fulfilling America’s Pledge, 2018

Figure 3 highlights the number and types of state activities focused on climate change mitigation. In addition to sector-specific policies, several states have recently passed notable legislation that increase economywide climate targets from 80 percent reductions in GHG emissions by midcentury to “net zero” emissions—levels that are unlikely to be affordably met without technology, policy, and business model innovation breakthroughs. Without an innovation agenda focused on driving down the costs of mitigating climate change, significant increases in energy costs could disproportionately impact the poor, especially in the absence of progressive policies that advance social justice goals.

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Figure 3 Many private sector players are also Total State-Level Mitigation-Related Activities by Type engaged in efforts to address climate Transportation change. Over 2,100 Energy Efficiency companies have signed the “We Are Renewables/CCS/Nuclear Still In” pledge (up Forestry and Land Use from 1,361 when Figure 2 was Non-CO2 Greenhouse Gases produced), indicating GHG Target/Cap/Pricing that they are committed to 0 50 100 150 200 meeting U.S. climate States (and other subnational governments) have been increasing their commitments after activities aimed at tackling climate change, including increasingly aggressive the Administration’s greenhouse gas reduction targets. Source: Fourth National Climate Assessment, 2018. announcement on leaving the Paris Agreement.11 According to the Corporate Climate Tracker, produced by David Gardiner and Associates, 45 Fortune 100 companies have made climate commitments.12 Earlier work by the National Association of State Energy Officials found that even more companies have set other kinds of goals, including to increase energy efficiency or , and that over 120 major companies have “independently-verified, science-based” (i.e., 80 by 50) greenhouse gas reduction targets.13 A 2019 report from the Transition Pathway Initiative, however, assessed 274 of the world’s highest emitting publicly listed companies and concluded that only about half (54 percent) of those companies have begun integrating climate change into operational decision-making.14 Of the 148 companies evaluated with the Initiative’s “Carbon Performance” benchmarking metric, only 18 percent are on track to meeting a 2°C target. Seventy percent of those companies are not aligned with any Paris goals at all (or do not disclose their emissions trajectory). The : An Aspirational Call to Action In the context of an urgent need for action and insufficient progress to date, the Green New Deal resolution was introduced in Congress. It calls for, among other things:15 [M]eeting 100 percent of the power demand in the United States through clean, renewable, and zero-emission energy sources…by dramatically expanding and upgrading renewable power sources…building or upgrading to energy-efficient, distributed, and ‘smart’ power grids, and ensuring affordable access to electricity…upgrading all existing buildings in the United States and building new buildings to achieve maximum energy efficiency, water efficiency, safety, affordability, comfort, and durability, including through . The Green New Deal is aspirational, shining an important spotlight on the climate crisis. It has jump-started a critical national conversation on the imperatives of addressing

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climate change risks to the economy, environment, and national security. In addition, it highlights the significant and growing need to address social equity issues for disadvantaged communities, who are least able to afford the costs of climate change and its mitigation options. The Green New Deal also addresses social policies across a broad spectrum of issues beyond energy. Consistent with the purpose of a Congressional resolution—an articulation of ambitions, not a statutory plan for action—it does not offer detailed energy sector- specific technology or policy solutions for achieving its ambitious agenda. Turning Climate Ambitions into Meaningful Actions The urgency of the climate crisis, the range and variability of subnational activities, and the ambition articulated in the Green New Deal resolution underscore a critical need: broad coalitions enabled by pragmatic, regional solutions and an emphasis on technology optionality and flexibility across all sectors of the economy. These coalition building blocks are essential for translating ambition into action. The lack of focus on coalition-building in the past has hamstrung coherent and The lack of focus on coalition-building comprehensive climate mitigation efforts, has hamstrung coherent and hampering our ability to rapidly move forward with effective responses. Siloed approaches comprehensive climate mitigation have spurred unrealistic “magical thinking” on efforts, hampering our ability to both sides of the issue. High-impact coalitions rapidly move forward with effective must be committed to deep decarbonization, responses. Siloed approaches have as well as recognize that their members will spurred unrealistic “magical thinking” have a range of interests and be impacted very on both sides of the issue. differently by different mitigation pathways. Such coalitions are also critical for acknowledging and effectively addressing the issues of stranded assets, economically dislocated communities, and displaced workers that could come with an accelerated clean . There is an existing foundation for expanding coalition-centric solutions, starting with a number of entities that have been focused on the need to bridge climate divides for many years. These include, among many others, the Bipartisan Policy Center, the BlueGreen Alliance, the Breakthrough Energy Coalition, C2ES’s Business Environmental Leadership Council, and ClearPath. Recently, the Chamber of Commerce, which represents three million U.S. businesses at home and abroad, issued a statement in March 2019 saying that concrete steps are needed to address climate change and that there is common ground on which “all sides of this discussion could craft real solutions.”16 The AFL-CIO stated: “America’s labor unions agree that climate change must be addressed…it is critical that the voices of American workers be included in the discussion, especially those who are most at risk of job disruptions and economic dislocation as a result of those actions.”17 U.S. manufacturers are also engaging. The National Association of Manufacturers launched a

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new initiative, the Energy Advance Center, that seeks to build partnerships with industry groups that are committed to carbon management policies.18 In public statements from this year’s Vatican climate summit, leaders from the global energy sector and financial and investment communities agreed that governments should set reliable and economically meaningful carbon pricing regimes; that decarbonization policies should be designed in a way that delivers innovations and investment while assisting those who are least able to pay; and that greater transparency, advocacy and engagement of the energy sector, the investment community, political leaders, energy consumers, and civil society is needed. On the conventional energy side: ten oil and gas companies launched the Oil and Gas Climate Initiative (OGCI) and in 2016 (three more have since joined), announcing a billion- dollar vehicle to “invest in innovative startups to lower the carbon footprints of the energy and industrial sectors and their value chains and use our OGCI network to help them achieve commercial success.”19 It is critical that these ambitions translate to actions. This confluence of a growing political consensus, imminent economic impacts, the value of incremental actions, bold political aspirations, and growing coalitions of disparate interests has created an opportunity and need for a robust coalition-building strategy. This strategy must offer pragmatic, science-based, accelerated, and durable solutions to energy-related climate challenges. To underscore the importance of such actions, in March of this year, former Secretary of Energy Ernest Moniz and Andrew Karsner, appointees of the and George W. Bush administrations, respectively, published an op-ed that made an urgent call for action, noting that “Today we face the ‘slow motion train wreck’ of climate change, but without the presidential leadership of the original New Deal. This only elevates the importance of acting now in Congress, in states and cities and in civil society to develop a practical Green Real Deal…”

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