EPA Analysis Finds Climate Security Act Could Cut GHG Emissions 25% Below 1990 Levels By 2050 at a Cost of 0.06 to 0.16 Percentage Points of GDP per Year; Transportation Contributes Little
|Sources of GHG abatement under EPA’s ADAGE modeling. Click to enlarge.|
An analysis by the US Environmental Protection Agency (EPA) of the Lieberman-Warner Climate Security Act (S. 2191) currently pending before the full Senate concluded that under the act total US greenhouse gas (GHG) emissions are approximately 40% lower (~ 3,749 MtCO2e) than reference case emissions in 2030 (~11% below 1990 levels) and 56% lower (~ 6,030 MtCO2e) in 2050 (~25% below 1990 levels).
These reductions would be achieved at a projected cost to GDP of between 0.9% ($238 billion) and 3.8% ($983 billion) lower in 2030 and between 2.4% ($1,012 billion) and 6.9% ($2,856 billion) lower in 2050 than in the Reference Scenario. That works out to a cost of about 0.06 to 0.16 percentage points per year from 2010 to 2050.
S. 2191 places declining GHG emission caps upstream on petroleum, natural gas, as well as manufacturers of F-gases and N2O and downstream on coal facilities. The bill establishes a market-driven system of tradable emission allowances and permits the use of domestic offsets and international credits. There also are bonus allowances for carbon capture and storage and set-asides for agriculture & forestry sequestration and landfill and coal mine methane mitigation.
The EPA concluded that the greatest emission abatement under S. 2191 occurs in CO2 emissions from the electricity sector. Transportation sector provides a relatively small proportion, due to the “relatively modest” indirect price signal an upstream cap and trade program sends to the transportation sector.
The projected ~$0.53 increase in the price of gasoline in 2030 and ~$1.40 increase in 2050 is not high enough to cause large changes in the demand for transportation or changes in how transportation services are provided, according to the EPA. The EPA did not evaluate reductions that could be achieved under a direct fuel and vehicle regulatory framework.
According to the latest US greenhouse gas inventory released by the EPA, when electricity-related emissions are distributed to economic end-use sectors,transportation activities accounted for 27% of inventoried US greenhouse gas emissions in 2006. Of that, the transportation end-use sector accounted for 1,855.1 Tg CO2 in 2006, representing 33% of total CO2 emissions in the US—the largest share of any end-use sector. (Earlier post.)
The transportation sector also carries the lowest allocation of CO2 resulting from electricity generation—4.9 Tg CO2 in 2006, or 0.2% of the 2,328.2 Tg CO2 produced from electricity generation in 2006.
Other conclusions from the analysis include:
The Climate Security Act’s cut in cumulative US greenhouse-gas emissions is deeper than one found earlier by EPA to be consistent with keeping global CO2 concentrations below 500 parts per million in 2100. The finding assumes that other developed countries reduce their emissions by less than the US, and that the developing countries do not start making similar reductions until 2025. According to the Intergovernmental Panel on Climate Change, keeping the global concentration below 500 ppm greatly decreases the risk of severe global warming impacts in the US and elsewhere.
Under the assumptions described above concerning action by other nations, the Climate Security Act does not shift US greenhouse-gas emissions abroad—“no international emissions leakage occurs.&rduqo;
The Climate Security Act’s allowance price and financial support for carbon capture and sequestration (CCS) make that technology a commercial reality in the US by 2015&madsh;several years earlier than in the absence of the bill.
One of the effects of the accelerated CCS deployment is to drive natural gas out of the electricity sector, to the benefit of manufacturers who use natural gas.
Under the Climate Security Act, increases in average US electricity prices materialize slowly and gradually. Forty years after enactment, prices reach a level 18% higher than the 2005 level. Over that period, the bill directs more than $1 trillion to lowering and offsetting US consumers’ actual energy costs.