C LIMATE A LERT

A Publication of the Climate Institute | Protecting the balance between climate and life on Earth

ACHIEVING ECONOMIC PROSPERITY

Volume 19,Volume 2 No. AND CLIMATE PROTECTION

— Spring 2009 Spring

FEATURED:

Does a Big Economy Need Big Power Plants? Amory Lovins

Output-Based Allowances for Efficient Greenhouse Gas Reductions Tom Casten

Green Building Doug Gatlin

The Smart Grid Bill Nitze

ALSO IN THIS ISSUE:

A Practical Roadmap for Efficient Vehicles

Green Provisions in the U.S. Stimulus Bill

Case Studies: The Race to Carbon Neutrality Spring 2009 Climate Institute News from Mexico and DC Volume 19, No. 2 Climate Alert

A MESSAGE FROM THE PRESIDENT

GOOD ECONOMICS: A STRATEGY THAT MIGHT SAVE THE CLIMATE Commentary by John C. Topping, Jr.

Climate protection and clean energy nomic sense may be the only hope of transformation are, as Max Jerneck’s enacting legislation to move the US to article indicates, a prominent feature of decisive action and help ensure success the recently enacted economic stimulus of international agreements before we package. As Bill Nitze points out, the pass climate tipping points. Least cost stimulus legislation contains a sizable approaches to greenhouse gas reduc- his issue of the Climate Alert investment toward a Smart Grid that tions may be the only way to assemble highlights the need to integrate T should enhance both the efficiency and the bipartisan coalition needed for climate protection strategy into efforts reliability of the US power system. Doug climate action. The US can realize siz- to catalyze economic recovery in the Gatlin indicates that dramatic increases able emissions reductions at annual US and the globe after the worst buf- in building sector efficiency can, over savings in the tens of billions of dollars feting in generations. Just as evidence time, greatly reduce greenhouse emis- by striking down restrictions in state grows that a mounting concentration sions and save businesses and home laws against resale of power gleaned of greenhouse gases driven by indus- owners large sums. Already some cities from waste heat to non-utility buyers, trial and agricultural activity is acceler- and entire nations are, as Heidi Heller and by changing transmission pricing ating us toward tipping points that, shows, going further and implementing rules that are tilted against local gen- once passed, might ultimately doom plans to become carbon neutral. eration by failing to factor in reduced our coastal cities and imperil our sup- line loss and lesser need for backup plies of food and fish, confidence is Yet before anyone cracks champagne, generation. shaken that our children and grandchil- there is some very hard slogging ahead. dren can look to an economic future It has become quite clear that major Even with these impediments, Amory brighter than their parents could antici- climate legislation will require sixty af- Lovins shows dramatic movement is pate. firmative votes in the Senate. A carbon underway toward a more decentralized

tax favored by many economists and and supple electric grid. The Output President Obama has acted decisively analysts does not appear to command Based Allowances proposed by Tom to move climate change and clean en- even a half dozen votes in the Senate. Casten would go far to achieve least ergy transformation atop his agenda At this point there may be as many as cost greenhouse reductions in the heat alongside economic recovery and fifty affirmative votes for some form of and power sectors. Also by avoiding health care reform. His appointments cap and trade, but despite sizable flow of revenues through government in areas of climate and energy policy - spending by environmental groups on coffers, Casten’s plan minimizes Steven Chu, Cathy Zoi and David San- media ads, the leading cap and trade chances for political pork and does not dalow at Department of Energy, Carol approaches seem well short of garner- feed fears of energy policy building a Browner as White House climate and ing sixty votes. The biggest reason is the Leviathan state. Mike MacCracken has energy lead, John Holdren to head the widespread perception that their enact- set out a similar framework for the Office of Science and Technology Pol- ment would bring burdensome costs to transportation sector that could icy, Nancy Sutley to head CEQ, Jane consumers and industry already achieve reductions quickly and Lubchenco to lead NOAA, and Lisa crimped by the economic downturn. cheaply, giving auto companies both Jackson and Lisa Heiserling at EPA - all Added to that is a growing public fatigue greater flexibility and incentive than enjoy high respect in the climate pro- with the mounting deficits and debt through command and control. Per- tection community. Todd Stern, the obligations associated with the bailouts haps combined with the feebates de- Special Envoy for Climate Change, will of financial institutions and auto compa- scribed in Danny Reed’s article, this report directly to Secretary of State nies. could be an engine for rapid reduction. Hillary Clinton, who has already made Such out of the box thinking may en- climate protection a key part of her We may be at one of those rare junc- able us to give our children some hope. discussions with world leaders. tures where doing what makes eco-

Page 2 Climate Institute | www.climate.org Volume 19, No. 2

DOES A BIG ECONOMY NEED BIG POWER PLANTS? Amory B. Lovins, Climate Institute Board of Advisors and Rocky Mountain Institute Cofounder, Chairman, and Chief Scientist

f I told you, “Many people need com- the grid. Thus the original architecture is Meanwhile, generators thousands or I puting services, so we’d better build raising, not lowering, costs and failure tens of thousands of times smaller — more mainframe computer centers rates: cheap and reliable power must now microturbines, solar cells, fuel cells, where you can come run your comput- be made at or near customers. wind turbines — started to become seri- ing task,” you’d probably reply, “We did ous competitors, often enabled by IT that in the 1960’s, but now we use net- The world is shifting decisively and telecoms. The restructured industry worked PC’s.” Or if I said, “Many people to micropower: cogeneration exposed previously sheltered power- make phone calls, so we’d better build plus renewables. plant builders to brutal market disci- more big telephone exchanges full of pline. Competition from a swarm of relays and copper wires,” you’d exclaim, Power plants also got irrationally big, up- smaller electrical sources and savings “Where have you been? We use distrib- wards of a million kilowatts. Buildings use created financial risks far beyond the uted packet-switching.” about 70 percent of U.S. electricity, but capital markets’ appetite. Moreover, the three-fourths of residential and commer- 2008 Defense Science Board report Yet if I said, “Many people need to run cial customers use no more than 1.5 and “More Fight, Less Fuel” advised U.S. lights and motors, Wii’s, and air condi- 12 average kilowatts respectively. Re- military bases to make their own power tioners, so we’d better build more giant sources better matched to the kilowatt onsite, preferably from renewables, power plants,” you’d probably say, “Of scale of most customers’ needs, or to the because the grid is vulnerable to long course! That’s the only way to power tens-of-thousands-of-kilowatts scale of and vast disruptions. America.” typical distribution substations, or to an intermediate “microgrid” scale, actually Central thermal stations Thermal power stations burn fuel or offer 207 hidden economic advantages have become like Victo- fission atoms to boil water to turn tur- over the giant plants (see rian steam locomotives: bines that spin generators, making 92 www.smallisprofitable.org). These magnificent technological percent of U.S. electricity. Over a cen- “distributed benefits” often boost eco- achievements that served tury, local combined-heat-and-power nomic value by about tenfold. The biggest plants serving neighborhoods evolved come from financial economics: for exam- us well until something into huge, remote, electricity-only gen- ple, small, fast, modular units are less risky better came along. erators serving whole regions. Electrons to build than big, slow, lumpy ones, and were dispatched hundreds of miles from renewable energy sources avoid the risks Big thermal plants’ disappointing cost, central stations to dispersed users of volatile fuel prices. Moreover, a diversi- efficiency, risk, and reliability were lead- through a grid that the National Acad- fied portfolio of many small, distributed ing their orders to collapse even before emy of Engineering ranked as its profes- units can be more reliable than a few big restructuring began to create new mar- sion’s greatest achievement of the 20th units. ket entrants, unbundled prices, and in- century. creased opportunities for competition Bigger power plants’ hoped-for economies at all scales. By now, the world is shift- Cheap and reliable of scale were overwhelmed by disecono- ing decisively to “micropower” — The power must now be made mies of scale. Central thermal power Economist’s term for cogeneration at or near customers. plants stopped getting more efficient in (making electricity and useful heat to- the 1960’s, bigger in the 1970’s, cheaper gether in factories or buildings) plus This evolution made sense at first, be- in the 1980’s, and bought in the 1990’s. renewables (except big hydroelectric cause power stations were costlier and Smaller units offered greater economies dams). less reliable than the grid, so by backing from mass production than big ones could each other up through the grid and gain through unit size. In the 1990’s, the The U.S. lags with only about 6 percent melding customers’ diverse loads, they cost differences between giant nuclear micropower: its special rules favor in- could save capacity and achieve reliabil- plants — gigantism’s last gasp — and rail- cumbents and gigantism. Yet micro- ity. But these assumptions have re- car-deliverable, combined-cycle, gas-fired power provides from one-sixth to more versed: central thermal power plants plants derived from mass-produced air- than half of all electricity in a dozen now cost less than the grid, and are so craft engines, created political stresses other industrial countries. Micropower reliable that about 98 percent to 99 that drove the restructuring of the utility in 2006 (the last full data available) de- percent of all power failures originate in industry. livered a sixth of the world’s total elec- (Continued on page 15) Page 3 Climate Institute | [email protected] Climate Alert OUTPUT-BASED ALLOWANCES FOR EFFICIENT GREENHOUSE GAS REDUCTIONS Tom Casten, Chairman, Recycled Energy Development

The public wants a low-cost, low-carbon future. A survey Future Years Adjustment and Expected Impact of Output released April 3, 2009, found that the U.S. public strongly Allowance System believes global warming is a problem (only 17% express In order to reduce U.S. carbon emissions from heat and power to deep doubt) and strongly favor actions to reduce carbon 20% of present emissions by 2050 – 40 years from now – the emissions (68% to 81%). People agree that high-carbon allowance for each MWh of electricity and for each MWh of thermal generators should be penalized and low-carbon genera- energy must decline each year. We recommend using a percentage tion rewarded. But a strong majority objects to paying carbon reduction each year, forcing larger absolute drops in the early more for energy services. Against this, the policy choices years but slowing down the reductions later after the easy fixes have under discussion – including a tax on carbon emissions or been wrung out of the energy system. A decline of 3.94% per year in cap and trade requiring every generator pay for 100% of allowances will reduce total allowed CO to 20% of 2007 levels by all carbon emissions – will significantly raise the cost of 2 2050. Figure 3 (below) depicts the allowances for each megawatt- energy services. These policies face near insurmount- hour of electricity and of thermal energy over time. able political resistance, not because the public doubts the need for de-carbonization, but because the public Figure 3: Allowances per MWh Over Time demands profitable, or at worst, neutral low-carbon op- Allowance / MWh Electric Allowance / MWh Thermal tions. A win/win approach – output-based pollution al- 0.7 lowances – will gain bipartisan approval, cause rapid 0.6 private-sector investment in low-carbon energy, and will 0.5 slash both carbon emissions and heat and power costs to 0.4 0.3 the economy. 0.2

Tons CO2 Per MWh Per TonsCO2 0.1 Average Output-Based Pollution Allowance Basics: 0.0

1. Provide each electric producer with initial allow- 2010 2013 2016 2019 2022 2025 2028 2031 2034 2037 2040 2043 2046 2049 ances equal to average 2007 emissions, which were Year roughly 0.62 metric tons of CO emissions per delivered 2 No one can predict how this system will affect the price of megawatt-hour of electricity (MWh ), and 0.32 metric E allowances over time, since price will be impacted by the actions of tons of CO emissions per delivered megawatt-hour of 2 every generator and every entrepreneur in the entire market. Even thermal energy (MWh ). T starting the output allowance system by allowing 100% of today’s 2. Require every plant that generates heat and/or average emissions will encourage every generator to increase fossil power to obtain allowances equal to total CO emissions. 2 efficiency, thus reducing carbon emissions per unit of useful energy. High-carbon plants purchase extra allowances from low- All investments in existing fossil generation plants that increase carbon plants at market prices. Since the total cost of efficiency will lower the fossil carbon emissions per unit of output. allowance purchases will equal revenue from allowance The same effect will occur with the addition of non-fossil fuel sales, the consumers of energy services will see no in- generation, such as biomass, recycled waste energy, or solar thermal crease in the average cost of heat and power, but low- energy. Any plant that combines the generation of heat and power carbon plants win and high-carbon plants lose. will earn double allowances from each unit of fuel burned – one for 3. Repeat these steps for three other pollutants – NOx, the electric energy produced and one for the thermal energy SOx and particulate matter. produced and sold. New generation that has no associated fossil 4. Schedule these allowances – for each pollutant per carbon – including all renewables, nuclear, and recycled industrial unit of output – to drop by a fixed percentage every year waste energy – will generate allowances without adding carbon and correct for increased output in order to insure total emissions. emission reductions. A 3.94% annual drop of carbon allowances will reduce 2050 allowances to 20% of today. This system will encourage all players to seek and deploy low- 5. Use these output-based pollutant allowances to cost, low-carbon options, which writ large, will profitably de-carbonize drive down pollution, replacing much of the Clean Air production of energy services. We would expect the allowance Act, including the need for operating permits and the market to initially clear at low prices, as entrepreneurs deploy proven New Source Review bans on major modifications of ex- technology that improves efficiency and reduces costs. Over time, as isting power plants. the output allowances drop, carbon’s clearing price will depend on the pace of introducing new technology and the speed of fuel switching away from fossil resources. Page 4 Climate Institute | www.climate.org Volume 19, No. 2

Comparing Two Systems – 100% Charge for all CO2 versus Average Output Allowances Output-based Allowance

The two figures below compare the economy-wide impact of regulating carbon under two Advantages different approaches. Assuming a $20 per metric ton cost of carbon emissions, a system that Output-based allowances charges emitters for 100% of their carbon emissions – whether by taxing carbon or by requiring (OBAs) leverage America’s each emitter to purchase allowances – would add net taxes of $76 billion per year from fossil innovative and creative spirit. fuel generators of electricity and thermal energy. Low- or no-carbon energy producers avoid this Carbon taxes or allowance economic stick, but receive no carrot. auctions of 100% of carbon

With the Average Output Allowance approach described above, the added costs for high- emissions transfer all the carbon plants in the first year are much lower, and all of the money flows to the low-carbon gen- money to governments that erators of electricity and thermal energy. Government only collects money as penalties if an then “pick winners” and dis- emitter fails to purchase permits for their full carbon emissions. tribute the proceeds to se- lected technologies. OBAs, by contrast, reward all actions Figure 1 (left) depicts the added costs or reve- that deploy low-carbon gen- Figure 1: Cost(revenue) of Two CO2 Systems nues to each form of electricity generation per 100% CO2 purchase Average Output Allowance eration and penalize contin- megawatt-hour of production. The red brick $15 ued operation or deployment bars depicting the 100%-charge approach show $10 of high-carbon generation, that fossil-fueled generation is penalized by $10 $5 to $20 per MWh, representing an average tax of thereby unleashing innovation $0 $8 per MWh on all heat and power. By con- and creativity. Coal Gas ($5) Hydro Nuclear Thermal OBAs are fiscally neutral. Petroleum Government trast, the solid blue bars, representing average ($10) Oth. Renewable DollarsperMWh output allowances, show that payments from High-carbon generators pay ($15) any specific generator are less than $8.00 per low-carbon generators. This ($20) MWh – or just 8% of last year’s average retail market-based exchange en- ($25) prices. Low-carbon generators, in contrast, courages heat and power pro- Type Generation receive between $2.00 and $12.00 per MWh. ducers to find and deploy low- This average output approach, therefore, means each stick has an equal carrot that encourages the cost, low carbon generation, rapid deployment of increased efficiency and low-carbon generation. lowering carbon and energy services costs, all without draining public coffers. Figure 2 (right) looks at the economy-wide dif- Figure 2: Cost(revenue) of Two CO2 Systems OBAs provide carrots to clean ferences between the two approaches, in bil- Billion Dollars per Year energy. Most approaches to lions of dollars per year. The approach of 100% CO2 purchase Average Output Allowance charging each heat and power generator for GHG mitigation hit high- $70 100% of its emitted carbon, as depicted by the carbon with a stick, but offer red brick bars, adds an initial tax of $46 billion $50 only the absence of the stick on electric consumers and $31 billion on resi- $30 as a reward to low-carbon dential, commercial, and industrial thermal $10 generators. OBAs provide users. The federal government takes in $76 ($10) Coal Petroleum Gas Nuclear Hydro Oth. Thermal Government immediate fiscal incentives to Renewable billion in new tax revenue and then presumably Billion Dollars per Year low-carbon generation, which ($30) uses the money in a variety of ways which may helps attract capital. ($50) or may not induce investment in clean energy. Type Generation OBAs make energy efficiency By contrast, the average output allowance ap- central to GHG control. Elec- proach causes no net increase in the cost to electric or thermal consumers, but sends price signals to tric utility regulations do not all generators that reward low-carbon generation and penalize high-carbon generation, all in propor- reward energy efficiency and tion to each generator’s carbon emissions per unit of useful delivered energy. the Clean Air Act inadvertently penalizes it. An OBA system, by contrast, encourages effi- These figures demonstrate that the 100%-charge approach harshly penalizes coal and provides ciency, which lowers GHG and billions of dollars to the U.S. Treasury. The output-based-allowance approach, in contrast, limits criteria pollutant emissions, the government’s role and balances rewards and charges amongst alternative technologies de- saves fossil fuel, and reduces pending upon their carbon emissions. Under the first scenario, a utility with significant coal-fired heat and power costs. OBAs resources would face significant charges that would lead to substantial rate increases. With out- stimulate investment in high put allowances, however, the utility’s charges would be balanced by its receipts for its low- or no efficiency while lowering all -carbon resources. pollutant emissions.

Page 5 Climate Institute | [email protected] Climate Alert Green Provisions in the U.S. Stimulus Bill:

Reducing emissions while saving the economy? Max Jerneck

The $787 billion American Reinvest- licly stated that “a crisis is a terrible proponents. Research shows that import- ment and Recovery Act, popularly thing to waste.” Proponents of the infra- ing foreign renewable energy technolo- known as the Stimulus Bill, contains structure spending argue that upgrading gies can spur the development of a do- $92 billion that can be regarded as the national electric power grid to a mestic industry. Expanding the domestic greenhouse gas reducing provi- smart grid and switching from fossil fu- green energy market is also a way of at- sions. These include $32.8 billion in els to renewables is as significant now tracting investments from foreign compa- clean energy, $26.86 billion in energy as building telegraph lines and railroads nies seeking to locate their manufactur- efficiency, and $18.95 billion in green was in the 19th century. The infrastruc- ing plants close to the American consum- transportation. More than being solely ture created by the New Deal, the most ers. Renewable energy investments could environmental measures, the green recent comparable example, was argua- thus create additional jobs through spin- provisions are aimed at addressing bly a key factor in the remarkable eco- off effects in the future. Once created, several important goals at once. By nomic growth that served the nation green jobs are likely to stay around; the making green investments, the Obama into the 1970s and beyond. Washington Employment Security De- administration is hoping to reduce partment includes green jobs as among The ARRA seeks to greenhouse gas emissions, create mil- the most recession resistant in 2009. create 1.7 million lions of jobs, save money on energy Unlike many forms of manufacturing, “green collar” jobs imports and reduce U.S. dependence constructing solar panels and wind tow- on foreign oil. Rebuilding the nation’s ers is in large measure still done in OECD- deteriorating infrastructure is another What kind of jobs and how many? countries. important goal. Crumbling roads and The White House estimates that the While the renewable energy meas- bridges - not to mention levees - have ARRA will create or save 5 million jobs, ures will at least in the short run create frequently made the news in recent including 3.5 million by the end of 2010. more foreign than domestic jobs, other years, and freight bottlenecks may cost Green provisions will account for green provision jobs such as weatherizing the economy $200 billion a year - around 1.7 million of these. In the com- homes cannot be outsourced. The meas- nearly 1.6 percent of GDP, according to ing months, nearly 500,000 jobs will be ures may also lead to job creation in the US Department of Transportation. created in the energy transmission sys- other sectors, by sparking demand for tem, advanced battery technology and goods such as double sheeted windows. Of the $787 billion in energy efficiency, according to the The first step in creating green jobs is to the Stimulus Bill, $92 White House. Around 440,000 jobs will retrain the work force. Green jobs provi- billion will fund be created in the public transport sec- sions will get $500 million in the ARRA, greenhouse gas tor, according to the American Public training 70,000 workers. If the plan suc- emissions reductions. Transportation Association. ceeds, unemployed auto workers could Investing in green jobs appears to be soon be re-trained to manufacture solar Opponents of the American Rein- an efficient way of reducing unemploy- panels and wind turbines. According to a vestment and Recovery Act (ARRA) ment. The Earth Policy Institute states study done by a federal task force, work- contend that it contains ‘wasteful’ that every billion dollars invested in Eight billion dollars will spending that coming generations will wind farms creates some 3,350 jobs, stimulate the U.S. high- have to pay for. Obama has responded which is nearly four times the 870 jobs speed railroad system, by stating that the ARRA not only cre- created with a similar investment in coal which lags woefully behind ates jobs in the short run, but saves -fired power plants. Investment in retro- Europe’s and Japan’s. billions of dollars in the long run. In fitting buildings creates more than fact, some of the green investments in seven times as many jobs as a similar the act are crucial, he says, to guaran- investment in coal-fired power plants. ers can expect higher salaries after train- tee that the U.S. economy will be Critics are concerned that spending ing. On average, clean-energy jobs pay 10 strong and competitive in the future. In on renewable energy will create more to 20 percent more than similar work the view of the Obama Administration, jobs overseas than at home, since the outside the field, the report showed. the current crisis is an opportunity to renewable industries of countries like provide the country with 21st century Germany, Denmark and Spain are more Public transportation green infrastructure. White House competitive. All the more reason to in- The transportation sector is chief of staff Rahm Emanuel has pub- vest in such industries, say the ARRA responsible for around 27 percent of

Page 6 Climate Institute | www.climate.org Volume 19, No. 2 total U.S. greenhouse gas emissions, and transit authorities in building energy effi- Smart Grid there is significant room for cient facilities.” The ARRA contains large An important energy measure in the improvement. The ARRA contains $8.4 sums of money toward public transport ARRA is the $11 billion to be spent on billion for public transit and $8 billion for spending, but the number is small com- power grid upgrading, making it a “smart high-speed rail. Compared to many in- pared with the $40 billion in spending grid.” The primary goal of the smart grid dustrialized countries, the American rail- included on highways. Besides public is to reduce energy costs, prevent power road system is in poor shape. Especially transportation, the ARRA provides a tax on the densely populated East Coast, credit of up to $7,500 for plug-in hybrid Every billion dollars in high speed rail could become a cheap vehicles and funding for advanced bat- funding wind farms and low-carbon alternative to air tery technology in an effort to stimulate creates 3,350 jobs. An travel. On the fastest railroad line today, the automotive industry. equal investment in the Acela line between Washington, D.C. coal-fired power plants and Boston, the trains average 86 mph, Energy efficiency creates only 870 jobs. which is about half the speed of France’s Energy efficiency efforts provide a TGV trains and a third as fast as the relatively quick and easy way of attaining outages and evenly distribute power Shanghai Maglev train, which connects economic and environmental benefits, from alternative sources like wind and Shanghai’s subway with Pudong Interna- while simultaneously creating jobs. Many solar. Not only is the smart grid impor- tional airport and can reach 268 of the technologies needed to weatherize tant to increase energy efficiency, it is in mph. High speed rail specialist Joe buildings are fully developed and can be many ways a prerequisite for the expan- Vranich considers an investment in an installed by unemployed construction sion of renewable energy production. In a East Coast high speed rail line to be the workers. Substantial energy savings can February 2009 senate hearing, former most effective way of spending the be achieved in this field, as about 40 per- Vice President Al Gore emphasized the stimulus money. A well-functioning line cent of energy use and carbon emissions important role of the smart grid in trans- in the United States come from con- porting green electricity from the windy Plug-in hybrid vehicles structing, operating and powering build- and sunny areas where it will be pro- will qualify for a tax ings. Furthermore, the investment re- duced to the customers that need it, of- credit of up to $7,500 turns of energy efficiency measures are ten hundreds of miles away. Smart grid very high both in terms of jobs created spending is the single largest energy pro- and speed of results. According to econo- vision in the ARRA. Critics argue, how- would set an example and fuel invest- mist Robert Pollin of the University of ever, that the allocated $11 billion is not ment in other parts of the country. Po- Massachusetts Amherst, “there is about nearly enough. Ed Legge, an analyst with litical realities will most likely compel $26 billion in retrofitting on public build- the Edison Electric Institute, has said that Obama to distribute the money in small ings that could be done the day after $50 billion is needed for all the investor- amounts among several train corridors, legislation is signed,” and each $1 million owned utilities (which make up 70 per- however, weakening the potential for in spending would bring about 18 jobs. cent of the U.S. utilities) to roll out smart any single high speed line. The ARRA contains about $4.5 billion grid networks. A survey done by the American Public to weatherize federal office buildings and Transportation Association found that $5 billion for a weatherization assistance Renewable energy the ARRA spending could fund 787 pro- program for low-income homes. The Over the next three years, Obama jects for 227 public transportation agen- White House estimates that the average promises to double the amount of re- cies that were ready to start within 90 family involved in this program would newable energy produced in the United days that otherwise wouldn't have been save $350 per year on heating and air States. The ARRA is a key component to able to proceed. It said these projects conditioning through proper weatheriza- that plan. It contains a host of economic would "create and sustain more than tion. The rationale behind energy effi- incentives to promote clean energy. 440,000 new jobs in the coming months.” ciency spending, apart from the environ- Among them are tax credits, bond and In addition to spending on public trans- mental gains, is that reducing electrical loan programs and direct spending in the port, the ARRA contains what the White bills will put more money in the pockets form of subsidies to renewable energy House deems “important policy items” of working and middle class families. This projects. Tax credits are provided for that may have lasting effects beyond the will free up money for them to pay off renewable energy investment and pro- expenditure. One of those is the Energy debts or spend on consumer goods - two duction. Investors in all forms of renew- Efficient Transit Facilities, which “directs crucial factors needed in order for the able energy can receive a 30 percent tax the Federal Transit Administration to economy to recover. credit, a provision that was previously develop a plan to encourage and assist (Continued on page 14)

Page 7 Climate Institute | [email protected] Climate Alert THE SMART GRID William A. Nitze, Chairman, Climate Institute Board of Directors, November 2002-February 2009

Improving the U.S. utilities supplying the end user to inte- company is deploying these units in sev- electricity transmis- grate local renewable energy sources into eral smart grid pilot projects around the sion and distribution the end user’s total power supply, store country, including the $100 million network through sufficient power at the end-user’s prem- SmartGridCity project in Boulder, CO deployment of new- ises to cover critical loads during outage, managed by Xcel Energy. The prelimi- information-based and moderate electricity use by different nary results from the Boulder pilot have technologies can systems within the end-user’s premises to been promising, demonstrating poten- make an important reduce the power required for a given tial end-use energy savings of 20% or contribution to reducing U.S. green- level of energy services. It would also en- more. house gas emissions and thereby reduc- able utilities to keep track of electricity ing the risks of disruptive climate use by specific systems within the end- The Obama Administration has made change. Our current electricity grid is user’s premises and to draw down power the smart grid a central component of inefficient; subject to black-outs and stored at those premises to help meet its energy and climate change policies. other disruptions; incapable of transmit- peak demand without curtailing custom- The Administration’s stimulus package ting large quantities of wind and other ers or building peak power plants. In the specifically directs $11 billion towards renewable energy from where it can be future, the smart grid will also be able to smart grid, including $4.5 billion in produced to where it is needed; and access power stored in the batteries of matching grants for smart grid projects unable to utilize distributed energy plug-in hybrids parked at the premises. to be chosen by the Department of En- sources to reduce peak demand for ergy (DOE) in a process that is still being electricity from conventional power Our current electricity grid is worked out. Smart grid companies may sources. The so-called “smart grid” inefficient; subject to black-outs and also be able to access funds from other would address all of these deficiencies. pots of stimulus money such as the $7.2 other disruptions; incapable of billion set aside for expanding broad- On a macro scale, the smart grid would transmitting large quantities of band services to underserved areas or replace outdated transmission infra- wind and other renewable energy the $3.2 billion to be distributed by structure with more modern power from where it can be produced to states through energy efficiency and lines and equipment, thereby reducing where it is needed; and unable to conservation block grants. DOE is al- line losses and the need to build new ready working on regulatory and right of utilize distributed energy sources to power plants. It would also create new way issues that need to be addressed to power lines to connect remote areas reduce peak demand for electricity make the smart grid a reality. with strong wind regimes or other re- from conventional power sources. newable energy resources to areas with The so-called “smart grid” would There are several large challenges that higher population density and electricity address all of these deficiencies. need to be overcome. The first is how demand. These lines would ideally be to pay for smart grid investments once high voltage, direct current lines buried the stimulus money has been commit- underground, which would reduce There are a number of products ranging ted. The obvious answer – higher trans- power losses, protect against weather- from smart meters to large battery stor- mission charges – is a hard sell politi- induced interruptions, and minimize age units that perform these functions cally. The second is how to create an resistance from people living near the already in the marketplace. GridPoint, integrated national grid. The obvious lines. The federal government would Inc., a company that I co-founded, manu- answer – transferring authority from also promulgate new interconnection factures energy management units that state regulatory commissions to the protocols that would maximize power can simultaneously keep track of where a Federal Energy Regulatory Commission sharing between regions in the event of customer’s electricity is coming from and – also faces strong political opposition. I a power shortage. The net effect would going to, convert direct current from solar am confident, however, that the Obama be a more efficient, resilient transmis- panels or another renewable energy administration has the political will to sion system and a higher proportion of source on the customer’s premises to high address these challenges and that a electricity from renewable sources. quality alternating current, store sufficient smarter grid will make a significant con- electricity to cover critical loads for 10 tribution to achieving our climate On a micro scale, the smart grid would hours or more during an outage, and ac- change and other energy and environ- empower the end user and the electric cess power stored in plug-in hybrids. The mental policy goals.

Page 8 Climate Institute | www.climate.org Volume 19, No. 2

GREEN BUILDING Doug Gatlin, Vice President of Market Development, United States Green Building Council

e’ve been hearing so much and certification of buildings’ design, con- a greenhouse gas cap-and-trade pro- W lately about the current econ- struction and performance in five key ar- gram. That’s roughly the same amount omy and its crushing impact on the real eas of environmental and health concern, of investment as the tax rebate checks estate market, both for residential and including energy efficiency, water effi- sent as part of the April 2008 economic commercial starts. However, a variety ciency, materials and resources use, sus- stimulus plan but would create 300,000 of recently released reports point to tainable site development and indoor air more jobs. green building as a key solution to many quality. of the challenges America faces today, Green buildings have the potential to from a faltering economy and unem- Green construction, along with benefit employers as well by helping ployment to rising energy prices and improvements to existing buildings companies cut costs and manage oper- dependence on foreign oil. have the potential to contribute ating expenses. Rising energy costs are billions to the economy. causing building owners and managers Green building has the potential to be a to tighten their belts, and the buildings significant driver for economic recovery. And economic hardship isn’t keeping com- they use day in and day out cost them McGraw-Hill Construction’s Green Out- mercial real estate executives from build- millions in unnecessary operational look 2009 report “Trends Driving ing green. A recent Turner Construction costs. Respondents to Turner’s “Green Change” shows that by 2013, the overall Company’s report “Green Building Ba- Building Barometer” said their green green building market (both residential rometer” found that 75% of those profes- buildings have resulted in lower energy and non-residential) is likely to more sionals – including developers, rental costs, with 68% reporting lower overall than double to $96-140 billion. The building owners, brokers, architects and operating costs. By investing in green same study found that 40% of green engineers – would not let the credit technology in both new and existing home builders report a marketing ad- crunch discourage them from building buildings, building owners and manag- vantage from green homes in today’s green. In fact, 83% said they would be ers are able to reap long-term opera- housing slump, with 16% finding it eas- “extremely” or “very” likely to seek LEED tional and maintenance savings, all the ier to sell green homes in today’s eco- certification for buildings they are plan- while bettering the environment. nomic market. Seventy percent of ning to build within the next three years. home buyers reported that they were The national economic recovery pack- more inclined to buy a green home in a And while jobs continue to be cut and un- age calls for green building-related ini- down market. employment continues to rise, green tiatives that will fuel as many as two building is able to generate new green million green jobs in the next five years. Other studies have shown that green jobs for Americans. The Center for Ameri- Green school construction and renova- construction, along with improvements can Progress and the Political Economy tion is also among the proposed pack- to existing buildings have the potential Research Institute at the University of age, helping not only to put Americans to contribute billions to the economy. A Massachusetts Amherst found in a Sep- back to work but also to create health- Greener World media study reported tember 2008 study that a national green ier educational environments that are that LEED certified projects are directly economic recovery program investing more conducive to learning. tied to more than $10 billion of green $100 billion over 10 years in six infrastruc- materials, which could easily reach ture areas would create 2 million new Green building offers a practical solution more than $100 billion by 2020. The U.S. jobs! With a focus on green building ret- and an opportunity for the building Green Building Council’s (USGBC) na- rofits and alternative energy sources, that community to lend its weight to tackling tionally recognized LEED green building investment could be paid for with pro- challenges facing society today. program provides third-party review ceeds from carbon permit auctions under

Page 9 Climate Institute | [email protected] Climate Alert

A Practical Roadmap for Efficient Vehicles Danny Reed Scientific evidence, as evaluated by “boost fuel economy” could easily be guarantee that such a program would the IPCC, makes overwhelmingly clear implemented with a fuel savings benefit result in a competitive alternative energy that climate change is an imminent that would exceed the cost by between vehicle. Without a clear direction, com- threat to human society. Today, Amer- “0 and 50 percent” (Portney). Apparently peting technologies spread funds too ica faces a debate concerned with what because they were not convinced that thinly and no clear winner arose from the role federal and state governments implementing the innovations would be PNGV. However, there is reason to be- should play to most effectively reduce economically beneficial to them, auto lieve that the PNGV might have seen greenhouse gas emissions. At the fore- manufacturers chose not to take these more success by aggressively intervening front of this dispute is the question of steps to improve fuel economy. Policy- in the marketplace to bolster demand for alternative energy vehicles. makers face the difficult task of adjusting more efficient vehicles.

In the coming years, it is likely that market demand to stimulate greater effi- Fuel Efficiency Standards there will be renewed federal efforts ciency in opposition to a natural environ- In 1975, Congress passed the Energy aimed at stimulating the production of ment that does not. Policy and Conservation Act, which cre- efficient vehicles. However, history has Federal Subsidies for R&D ated the Corporate Average Fuel Econ- already relegated a plethora of such In 1993, then-President Bill Clinton omy Standards (or CAFE) program. Higher legislation to the graveyard of failed forged a groundbreaking partnership gas prices in combination with the new policy. Especially considering the cur- between auto companies and the federal standards had “a significant effect on fuel rent economic crisis, policymakers seem government that promised alternative economy” (Portney). According to the likely to enact such policies cautiously, energy vehicles that “would get 80 miles EPA, average new passenger vehicle MPG being careful to evaluate the potential per gallon, and be affordable” to con- rose from “17 MPG in 1978 to more than for welfare gains and losses in all sec- sumers (Holzman). The ambitious plan to 22 MPG in 1982, an increase of more tors. Efficiency standards, federal subsi- have alternative energy vehicles on the than 30 percent” (Portney). Perhaps even dies for R&D, gas taxes, and ‘feebates’ road by the year 2000 was officially more significant are the increases that are examples of past policies enacted called the Partnership for a New Genera- occurred after 1982. Following 1982, gas domestically and internationally in an tion of Vehicles (or the PNGV). Under the prices began a significant decline leading effort to bolster vehicle efficiency. new partnership, the federal government many to expect a corresponding decline These examples of legislation provide and automakers spent roughly $600 mil- in MPG. However, vehicle efficiency sta- valuable lessons that can enable policy- lion per year on research to develop effi- tistics shocked many analysts and contin- makers to produce a well-balanced ap- cient automobile technologies. The part- ued to climb until 1987. proach to the issue of efficient vehicles nership was a welcome effort at a time While CAFE was successful in improv- going forward. when environmentalists were critically ing average MPG, it was not without its The fact that consumers concerned with the need for alternative imperfections. Some argue that CAFE seriously undervalue the fuels and vehicles. In 1996, US vehicles standards might spur innovations and lifetime savings of greater burned 15 quadrillion British thermal welfare gains in the vehicle sector by efficiency creates a real units of gasoline, totaling two-thirds of encouraging R&D. However, others warn difficulty for policymakers. the nation’s petroleum consumption that unnaturally forced R&D comes at a (Holzman). Just four years after the initia- cost. That cost might manifest itself in tion of the plan, the National Research “crowding out” R&D ventures within Will the Market Naturally Provide Effi- Council reported that the program was other sectors of the economy (Portney). cient Vehicles? doomed to failure. The study by the Na- Such an effect might risk damaging an A serious issue facing policymakers is tional Research Council established that already fragile economy. whether or not the market would ever none of the technologies would meet the Another possible downside to man- naturally offer improved efficiency in technical or cost objectives set forth by dated efficiency standards such as CAFE vehicles. There are many indicators that the PNGV. Ultimately, the PNGV made is the so-called portend a market failure in this regard. some gains in technology, but many of “rebound effect,” For example, evidence suggests that these technologies were not manufac- which suggests that consumers normally undervalue the tured or sold. The subsidies were just not greater efficiency long-term financial savings of more effi- enough of an incentive. creates an incentive cient vehicles (Greene). In addition, a The shortcomings of the PNGV indicate to drive more study released by the National Research that there are far too many competing (Portney). One study Council in 2002 found that a variety of technologies, far too many variables to estimated the initial technologies with the potential to control, and far too few public dollars to rebound effect due

Page 10 Climate Institute | www.climate.org Volume 19, No. 2 to higher CAFE standards to be about 10 Just like the PNGV and CAFE programs, sector. With a soaring federal deficit, -20 percent or more (Portney). When the gas tax is not without its weaknesses. policymakers face a unique challenge. considering the proportional welfare ‘Feebates’ They must implement measures that are loss due to “increased traffic conges- Feebates are relatively new to the not only effective, but also affordable. tion” and “traffic accidents,” this re- United States, though they have already Considering the current economic cri- bound effect reveals itself to be a real been implemented in France and Canada. sis, revenue-neutral feebates are the challenge (Portney). most reasonable policy. While a feebate A feebate is a market-based policy in Gas Taxes which vehicles with MPG above a given should be the heart of this integrated The PNGV and CAFE standards might “pivot point” are charged fees, while ve- policy, gas taxes, subsidies, and efficiency have benefited from cooperative mar- hicles below the pivot point are awarded standards could serve as much needed ket-altering policies. Gas taxes offer rebates. The fact that consumers seri- support. Gas taxes would buffer welfare governments a revenue stream while ously undervalue the lifetime savings of losses from a potential rebound effect. having the effect of artificially inflating greater efficiency creates a real difficulty Efficiency standards could serve as a fail- gas prices. Two studies by the National for policymakers. Feebates offer an at- safe to ensure efficiency does not drop Research Council and the Congressional tractive solution to this market failure. too low. Research subsidies could spur Budget office claim that an increase in Studies indicate that within a short innovation, but should be used with great the national gas tax would have the ef- period, feebates would be capable of discretion considering budget shortfalls. fect of reducing gas consumption at a inducing significant increases in fuel All of these have a place in modern lower cost than tightening CAFE stan- economy, with minimal corresponding policy – but that place should be carefully dards (West). reduction in overall vehicle sales considered with an eye to the past while Evidence indicates that less driving (Greene). In fact, the same study demon- being conscious of current economic dif- has the positive side effect of encourag- strates that a $500 feebate would ficulties. ing “labor supply” because gas and lei- achieve major daily fuel savings in a rela- The Obama Administration has already sure are “relative complements” (West). tively short span of time, significantly taken promising steps to encourage vehi- As people spend less time in transit, reducing emissions and demand for oil cle efficiency. On January 26, Obama in- they have more time for leisure or labor. (Greene). structed the new head of the Environ- An increase in gas taxes would “likely Another attractive feature of feebates mental Protection Agency to allow states lead to a welfare gain” with no corre- is that they can be easily crafted to be to set tighter emission standards on light sponding rebound effect (West). The revenue neutral for the government en- vehicles. In doing so, Barack Obama has study concludes that it is “highly unfor- acting the measure. In a time when gov- erased any doubt about his plans to put a tunate that policymakers have focused ernments face mounting debts and green agenda at the heart of his presi- on CAFE” (West). budget difficulties, a revenue neutral dency. Works Cited Despite these upsides, a higher gas feebate might present an attractive solu- Greene, David, Philip Patterson, Margaret Singh, tax might not be politically expedient. tion. Jia Li. "Feebate, rebates, and gas-guzzler taxes: a

The same study that praises the gas tax study of incentives for increased fuel economy." Conclusion Energy Policy 33.6 (2005): 757-775. for its potential concedes that “gas The strengths and weaknesses of these taxes seem to be politically infeasi- Holzman, David. "A Driving Force." Environmental different shades of policy substantiate Health Perspectives 105.6 (1997): 582-587. ble” (West). Without public support, a the need for a well-rounded approach to Portney, Paul, et al. "Policy Watch: The Economics gas tax might not be a plausible solu- stimulating efficient vehicles. There is no of Fuel Economy Standards." The Journal of Eco- nomic Perspectives 17.4 (2003): 203-217. tion. In addition, some critics of the gas perfect policy, but past policies provide a tax claim it is regressive and hurts low West, Sarah and Roberton III Williams. "The Cost model for a new comprehensive, inte- of Reducing Gasoline Consumption." The American income Americans disproportionately. grated strategy for the transportation Economic Review 95.2 (n.d.).

Michael MacCracken’s Proposal Michael MacCracken, Chief Scientist of the Climate Institute, has offered an innovative policy proposal to reduce greenhouse gas emissions from vehicles. MacCracken suggests that a cap and trade system could serve as a substitute for other programs aimed at reducing greenhouse gas emissions from vehicles. The proposed plan would allocate greenhouse gas emission permits at no cost to vehicle manufacturers. The emission permits, covering all vehicles in use that manufacturers have produced, would be valid for a predetermined time period. The amount of allowances associated with the permits would depreciate each year in order to de- crease overall emissions over time. These allowances would be tradable, allowing manufacturers a level of flexibility by providing a temporary alternative means of compliance. The program would incorporate both new and old vehicles, thereby compelling manufacturers to improve the performance of new vehicles, purchase and retrofit older vehicles, and promote policies to reduce emissions. Auto manufacturers would also have greater incentive to encourage customers to use alternative fuels such as biofuels. For more information, see Dealing with Transportation Emissions in Climate Change Legislation

Page 11 at http://climate.org/about/maccracken-bio.html. Climate Alert

THE CARBON WORLD CUP Heidi Heller With the threats of climate change and global warming, many organi- Rizhao, China Situated on the eastern coast of China, Rizhao is one of the first cities in the world to zations and societies are seeking see the sun rise every morning. “Rizhao” translates to “City of Sunshine,” a characteristic methods to improve their environ- which seems to have been the inspiration behind many of the city’s projects. In 1992, the mental and economic outlooks. As city mandated that all new buildings install solar water heaters, and now 99% of the society progresses, using current homes in central Rizhao use solar power to heat their water. Because of technological energy options will become in- advances, the price of installing these solar water heating systems is approximately $190 - creasingly costly as well as envi- about the same as electric heaters - yet they save almost 350 million kilowatt-hours of ronmentally degrading. One prom- electricity each year. In addition to the water heaters, many light sources, specifically traf- ising solution is the goal of “climate fic lights and street lamps, are now powered completely by solar panels. neutrality.” Climate neutral is a Apart from the focus on solar, Rizhao has been cutting emissions with other innova- term used to describe different tive technologies. Using the idea of a “circular economy,” industries in Rizhao are develop- companies, cities, and even coun- ing systems that utilize the waste generated from production. For example, a local bio- tries that aim to reduce their net chemical plant is able to use two types of waste it produces to create energy and usable byproducts. After mold is used to make a weak acid from corn and sweet potatoes, the greenhouse gas emissions to zero. liquid waste is separated into a “biodigester” where microbes are able to produce meth- The two concepts involved with ane. This methane is then burned, helping to dry the solid waste which can then be sold to becoming climate neutral include local farmers as animal feed or fertilizer. It also creates electricity for four different gen- the practice of reducing current erators at the plant. Technologies such as these boost energy efficiency, and utilize waste total emissions through available that would otherwise become a pollutant. technologies and renewable en- Due to these efforts, Rizhao has recently achieved considerable success towards ergy sources, and offsetting the climate neutrality. The city has experienced a significant rise in economic output, reduced remaining carbon emissions by its energy use by a third, and halved CO2 emissions. The Chinese State Environmental Pro- paying others to sequester them. tection Administration (SEPA) has named Rizhao a model city. However, there are still a These efforts rely on new technolo- few indirect carbon contributions that Rizhao will have to address in the race to climate th gies to reduce costs and create neutrality. First, Rizhao is the 9 largest shipping port in China. While this boosts its econ- more innovative solutions for envi- omy, it also associates Rizhao with greenhouse gas emissions currently beyond its control. Rizhao cannot force the shipping companies to use methods that don’t emit CO , and ronmental sustainability. To help 2 therefore is prevented from truly being climate neutral. Rizhao is also a tourist commu- those interested in becoming cli- nity, which contributes more unaccountable fossil fuel burning. These will be two impor- mate neutral, the United Nations tant factors for Rizhao to tackle throughout their transformation to climate neutrality. Environment Programme formed the Climate Neutral Network. This organization works to publicize The Maldives current information and achieve- This March the Maldives announced plans to become the first carbon neutral ments within the climate neutrality country. The Maldives, a small island nation comprised of 26 atolls in the Indian Ocean, is field. It also serves as a forum and already experiencing the effects of climate change. The Maldives’ population of over 300,000 is threatened by coastal erosion, overcrowding, intensifying storms, and sea level network to bring together climate rise. The highest point in the country is a mere 2.3 meters above sea level, and scientists’ neutral communities and encour- predicted rate of sea level rise will submerge many Maldivian islands by 2100. age others to follow. Four cities President Mohamed Nasheed, recognizing that his nation’s very existence is in that have already pledged to be- jeopardy, vowed to become carbon neutral in a decade. Since the Maldives’ per capita come climate neutral are Växjö, greenhouse gas emissions are tiny compared with the United States’ (1.9 vs. 23 tons per Sweden; Rizhao, China; Samsø, capita), the Maldives’ goal of carbon neutrality is largely symbolic, intending to demon- Denmark; and Vancouver, Can- strate to larger nations the urgency of combating climate change and the feasibility of ada. The Maldives also recently swift action. "Climate change threatens us all. Countries need to pull together to de- vowed to become climate neutral, carbonize the world economy," Nasheed said in a statement. "We know cutting green- joining Costa Rica, Iceland, Nor- house gas emissions is possible and the Maldives is willing to play its part." way, New Zealand and Monaco in The Maldives’ $1.1 billion plan will require 155 wind turbines supplying 1.5 mega- a race to be the first climate neutral watts each and a half a square kilometer of solar panels to meet the population’s electric- ity demands. A power plant in the capital, Malé , will be fueled by coconut husks and will nation. (Continued on page 15)

Page 12 Climate Institute | www.climate.org Volume 19, No. 2

Samsø, Denmark Vancouver, Canada The Danish island of Samsø has enjoyed re- Vancouver is the third largest city and one of the largest in- markable success on the journey to climate neutrality. dustrial centers in Canada. As a world leader in active climate aware- The island lies off the coast of Denmark in the North ness, the city began work in 1990 to increase sustainability and reduce Sea and has a population of 4,400. In 1992, a focus on emissions. It has been ranked as one of the top three livable cities for sustainability within the European Commission’s Com- the past ten years by the Worldwide Quality of Living Survey, and Van- munity Strategy and Action Plan helped to start the couver continues to set high goals for further reduction targets. ALTENER Programme in Samsø. This plan encouraged Part of Vancouver’s success has been due to its prime loca- islands and cities in the European Union to use renew- tion. British Columbia has an abundance of rivers available for hydro able energy, and Samsø, one of the few participants, electricity, making it an easy and plentiful renewable energy source. has done very well. The program ended in 1997, but the Also, because of the mild climate and lack of a freeway system, com- island still depended largely on oil and petroleum, so munities that develop around Vancouver can encourage cycling and ALTENER developed an extension program which con- walking as modes of transportation, which reduces the need for auto- tinued through 2002. Also in 1997, Samsø was declared mobile use. These factors have contributed to Vancouver’s general “Denmark’s Renewable Energy Island” due to its pro- strategy of reducing emissions, which focuses on civic buildings, trans- gress, and in the past 10 years has cut its carbon foot- portation, and waste management. In 2003, the city enacted a Corpo- print by 140%. Samsø is able to over-comply by selling rate Climate Change Action Plan, which asked companies to continue extra electricity generated on the island to the rest of reducing their green house gas emissions and set an example for the Denmark. public. This led to the Community Climate Change Action Plan in 2005 The bulk of the transformation on Samsø was which targeted the whole Vancouver population. Both of these pro- achieved in the transportation, heating, and electricity jects helped achieve a stabilization of green house gas emissions at 5% sectors. Currently it isn’t possible for transportation to above Vancouver’s 1990 levels, even though there has still been sig- become completely dependent on renewable energy, nificant population and economic growth within the city. though the government provides incentives for resi- Though Vancouver has already achieved admirable emissions dents to purchase electric cars. To compensate for reductions, in 2007 the city set ambitious and long-term goals to transportation’s high energy consumption, the island come closer to climate neutrality. These targets mandate that munici- has built extra wind turbines offshore. The electricity pal operations become climate neutral by 2020, all new buildings be produced from these turbines can be used to power carbon neutral by 2030, and community emissions be reduced 80% electric vehicles as well as hydrogen production, which is also useful for renovating transportation. Samsø is (Continued on page 15) also looking at the use of biodiesel to decrease total oil Växjö, Sweden consumption. Växjö, one of the first cities in the world to take on the chal- Unlike transportation, the electricity sector has lenge of becoming climate neutral, has seen many accomplishments. been extremely successful in becoming climate neutral. Recently honored with the sustainable energy award from the Euro- As of 2002, 100% of electricity on Samsø comes from pean Commission in February of 2007, Växjö has been called the wind. There are currently 11 onshore turbines, each “Greenest City in Europe,” and has been working towards becoming generating 1 MW, and 10 offshore turbines able to gen- fossil fuel free since 1996. As of 2006, 52% of the city’s energy comes erate 2.3 MW each. The turbines are owned largely by from renewable sources. Some of Växjö’s current goals include pro- residents of the island, keeping the economic benefits moting the use of bikes as a form of transportation and designing the local and within the Samsø community. city to remove barriers to cycling, increasing the use of public trans- Heating has been an interesting field because portation for local and regional travels by 20% and 12% respectively, of the multiple solutions for Samsø. On the island, mul- and cutting CO2 emissions 30% from Växjö’s 1999 levels by 2015. tiple systems have been developed for district heating Two of the primary focuses in Växjö have been on the energy plants as well as individual heating systems. Though supply for heating and transportation, with the goal of independence most of the heating comes from burning biomass espe- from fossil fuels for energy. Already, heating in the district has im- cially for the larger plants, solar panels and heat pumps proved. In 2005, about 88% of the energy used for heating was renew- have also been installed across the island. The heating able, largely from biomass but also from peat, geothermal, and solar. industry has been specifically significant because of the Transportation has been a harder issue to tackle for the city. economic benefits and job opportunities it has pre- Though they hope to decrease their fossil fuel consumption through sented. The installation and maintenance of heating an increased use of public transportation, they are still working to cut systems has helped create more opportunities for gasoline (the primary fuel source) entirely from the transportation plumbers, carpenters, and general tradesmen. These sector. So far four stations have been established for ethanol distribu- systems are also using readily available resources on tion, and one filling station for biogas. The city is currently considering the island, and are affordable for locals. biofuels to continue their decreased dependence on fossil fuels.

Page 13 Climate Institute | [email protected] Climate Alert Climate Institute News

NEWS FROM MEXICO theater pending installation at the Mex- mate awareness campaign with In cooperation with key scientific and ico City Museum of Natural History, a CICEANA, as well as work with the Cli- environmental organizations in Mexico climate theater at the Pelopidas Mu- mate Lab to enable climate network and in the international community, the seum in Cancun, and the Climate Insti- visitors to participate in this evolving Climate Institute is creating the world’s tute Training Center in Mexico wiki on climate solutions, and work with first National Interactive Climate Aware- City. Plans are being implemented to states and industry groups. ness and Response Network. Building on extend the national network to such Mexican national pride surrounding the cities as Cuernavaca and Veracruz, and NEWS FROM DC 2009 construction of the world’s highest to develop similar networks elsewhere As part of the Climate Institute’s efforts climate observatory, this evolving net- in Latin America. to reach an international audience, work seeks to link the soon-to-be func- much of the content on tioning Sir Crispin Tickell High Altitude On April 6, Televisa, Mexico’s leading www.climate.org is being translated Observatory and climate theaters in television network, transmitted an hour into an increasingly wide array of lan- several museums and Observatory out- and 50 minute telecast from the Sir guages. Most recently, Valentina reach centers. The Climate Institute has Crispin Tickell Education and Outreach Agostinelli, one of the pioneers of the already begun taking greenhouse gas Center in Flor del Bosque Park. Partici- Climate Institute’s Virtual Intern Pro- measurements at the observatory site pating in the Experts Panel on climate gram, has helped to expand our interna- atop Sierra Negra in the State of Puebla. change were Hector Garcia, Director of tional reach by translating articles into Construction of facilities at the observa- the North America Environmental Com- Italian. A native of Rome, Italy, Valen- tory is expected to be complete by early mission; Eduardo Vazquez, Director of tina has been residing in Washington, fall 2009. the National Natural History Museum in DC for the last year serving as an intern Mexico City; Francisco Castillo, Secre- and diplomatic liaison for the Italian Well before the observatory is fully op- tary of Environment and Natural Re- Embassy. Valentina holds a Masters erational, parts of the Interactive Net- sources of Puebla; and Luis Roberto degree in Advanced Forms of Interna- work are already drawing wide interest. Acosta, Director of Climate Institute tional Functions focusing on Agricultural On February 20, 2009, the Sir Crispin Programs in Mexico and Latin America. Policy from Società Italiana Organizzazi- Tickell Observatory Education and Out- oni Internazionali (SIOI) in Rome. Her reach Center (see photograph on back By 2010 it is anticipated that as many as undergraduate studies at Universtià La cover) was opened in Flor del Bosque, 20,000 visitors each week at sites Sapienza di Roma focused on Interna- an environmental education park in throughout the Network will experience tional Cooperation and Development Puebla. Over 15,000 visitors received a comprehensive multimedia presenta- with a particular focus on energy and 37-minute multimedia presentation on tions on climate and be introduced to environmental issues, specifically envi- climate change implications during the tools to enable and empower them to ronmental governance, sustainable de- observatory’s first month in operation. become problem solvers, working on velopment and the relationship be- By mid-2009, it is anticipated that the innovative adaptation and emissions tween the environmental policies of Interactive Network will link the Tickell reduction. The network will leverage European Union and United States. The High Altitude Observatory, the Outreach other joint efforts the Climate Institute Climate Institute thanks Valentina for Center at Flor del Bosque, a climate is undertaking, including a national cli- her contributions.

(Stimulus Bill, from page 7) grants, which is presumably a more at- structure. Compared with traditional only available for solar power. By ex- tractive option in these economically investments however, the amount tending the existing tax credits for wind harsh times. Projects aimed at building seems fairly moderate. Highways re- energy production to three years, the or rebuilding existing facilities to pro- ceive more than twice the amount of ARRA attains stability in the market, duce components for renewable energy money that does public transportation. sending an important signal to investors generation are also encompassed by the And the $11 billion dollars allocated to that wind energy is a safe bet. Research tax credit incentives, and so is the pro- the smart grid seem rather modest, con- shows that such stability is crucial to duction of hybrid or alternative fuel ve- sidering the importance of the project. attracting investments and expanding hicles and instalments of alternative fuel The American Recovery and Reinvest- the market in renewable energy. Instead pumps at gas stations. ment Act might be but the first step in a of applying for tax credits, renewable coming expansion of government green- energy producers can apply for cash The ARRA contains unprecedented house gas mitigating efforts. amounts of spending on green infra-

Page 14 Climate Institute | [email protected] Volume 19, No. 2

(Big Power Plants, from page 3) lion-kilowatt scale of the 1980’s to the China’s nuclear program, the world’s tricity (more than nuclear power) and a hundredfold-smaller scale that prevailed most ambitious, achieved one-seventh third of the world’s new electricity. Mi- in the 1940’s. Even more radical decen- the capacity of its distributed renewable cropower plus “negawatts” — electricity tralization, all the way to customers’ capacity and grew one-seventh as fast. In saved by more efficient or timely use — kilowatt scale (prevalent in and before 2007, the U.S., Spain, and China each now provide upwards of half the world’s the 1920’s), is rapidly emerging and may added more wind capacity than the new electrical services. The supposedly prove even more beneficial, especially if world added nuclear capacity, and the indispensable central thermal plants pro- its control intelligence becomes distrib- U.S. added more wind capacity than it vide only the minority, because they cost uted too. added coal-fired capacity during 2003 to too much and bear too much financial 2007 inclusive. risk to win much private investment, Global competition between big and whereas distributed renewables got $91 small plants is turning into a rout. In What part of this story does anyone who billion of new private capital in 2007 2006, nuclear power worldwide added takes markets seriously not understand? alone. Collapsed capital markets now 1.44 billion watts (about one big reac- Central thermal stations have become make giant projects even more unfi- tor’s worth) of capacity — more than all like Victorian steam locomotives: mag- nanceable, favoring lower-financial-risk of it from uprating old units, since retire- nificent technological achievements that granular projects even more. ments exceeded additions. But that was served us well until something better less capacity than photovoltaics (solar came along. When today’s billion-watt, In short, many, even most, new generat- cells) added in 2006, or a tenth what multi-billion-dollar plants retire, we ing units in competitive market econo- windpower added, or 2.5 percent to 3 won’t replace them with more of the mies have already shifted from the mil- percent of what micropower added. same. I’m already experiencing a whiff of prenostalgia.

(Vancouver, from page 13) 2007, VANOC met with the United Na- sports. This year’s conference will focus from their 1990 levels by 2050. For these tions Environment Programme, or on “Innovation and Inspiration,” discuss- targets to be reached, changes must be UNEP, and agreed to work as partners ing the best practices currently available made at the corporate and community and decided on environmental goals to for sustainability and using the Olympics levels. set for the 2010 Winter Games. These as a method of educating the individuals Vancouver is also scheduled to host goals will focus on six different catego- involved as well as the public on global the 2010 Winter Olympics, which has ries which are specified on the Vancou- warming and climate change. received mixed reviews among many due ver 2010 website: accountability, envi- to the environmental implications. Host- ronmental stewardship and impact re- (The Maldives, from page 12) ing such an event is bound to affect the duction, social inclusions and responsi- charge $315 million worth of batteries local environment as well as require a bility, aboriginal participation and col- for use during windless nights. Since large increase in energy consumption and laboration, economic benefits, and much of the nation’s economy is based greenhouse gas emissions. To accommo- sport for sustainable living. In general on tourism, the greenhouse gas emis- date and support the sporting events, VANOC hopes to make the whole proc- sions from air travel will be offset with participants, and spectators, the city ess, from building the infrastructure to EU carbon credits. An education pro- must develop a whole new infrastructure the actual Olympic events, as sustain- gram will teach citizens that everyone’s which may damage the habitats of local able as possible and with minimal im- individual efforts contribute to strong animals, including grizzly bears, which pact on energy use, habitat, and the collective action. has been a main concern. The production lifestyle of Vancouver residents. In addition to the environmental and of CO2 from building and travel is also a Along with these objectives, VANOC climate benefits, there are financial in- major issue partly because of account- will also host the 8th World Conference centives to carbon neutrality: for a re- ability, and also due to fact that the on Sport and the Environment in Van- mote island nation like the Maldives, greenhouse gas output will remain much couver at the end of March. The confer- where oil and diesel imports are ex- higher than current levels even after the ences are held every two years and are tremely expensive, the shift to renew- Olympics. hosted by a partnership between UNEP able energy will pay for itself in ten In response to these concerns, the and the International Olympic Commit- years. By eliminating the use of fossil Vancouver Organizing Committee tee (IOC). The conferences developed fuels and drastically cutting their green- (VANOC) has been working to reduce the around two major concerns: the envi- house gas emissions, the Maldives will possible environmental effects as much ronmental impact of sports, specifically lead the world in the necessary shift to as possible and has produced very spe- the Olympics, and the impact of a de- renewable and sustainable energy sys- cific and detailed plans. In October of graded environment on the athletes and tems to stimulate a prosperous economy and society.

Page 15 Climate Institute | [email protected]

CLIMATE INSTITUTE

ounded in 1986, the Climate Institute was the first non-profit organization 900 17th Street NW Suite 700 F established primarily to address climate change issues. Working with an extensive Washington DC 20006 network of experts, the Institute has served as a bridge between the scientific Fax : (202) 547-0111 Phone : (202) 547-0104 community and policy-makers and has become a respected facilitator of dialogue to Email : [email protected] move the world toward more effective cooperation on climate change responses. http://www.climate.org

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Climate Alert Published periodically by the Climate Institute © Copyright 2009 ISSN 1071 –3271 Printed digitally on 100% post-consumer recycled, processed chlorine free paper produced using 100% Mark Goldberg, Publications Chairman John C. Topping, President wind power in a carbon neutral process Corinne Kisner, Editor-in-Chief