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252. Levelized Cost of Carbon Abatement: An Improved Cost-Assessment Methodology for a Net-Zero Emissions World
- Author:
- Julio Friedmann
- Publication Date:
- 10-2020
- Content Type:
- Working Paper
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- New policies are needed to achieve the net-zero emissions required to address climate change. To succeed, these policies must lead directly to swift and profound abatement of greenhouse gas (GHG) emissions. Policies that appear effective on the surface too often have little real impact or are costly compared to alternatives. Governments, investors, and decision makers require better tools focused on understanding the real emissions impacts and costs of policies and other measures in order to design the most effective policies required to create a net-zero world. This paper, from the Carbon Management Research Initiative at Columbia University’s Center on Global Energy Policy, puts forward a levelized cost of carbon abatement, LCCA, an improved methodology for comparing technologies and policies based on the cost of carbon abatement. LCCA measures how much CO2 can be reduced by a specific investment or policy, taking into account relevant factors related to geography and specific asset. It calculates how much an investment or policy costs on the basis of dollars per ton of emissions reduced. Previous marginal or levelized cost methodologies that assess carbon reduction options often failed to consider the specific contexts that determine the real, all-in costs of a policy and the real, all-in impacts on emissions. These costs and impacts can vary depending on the contexts and details of geography, existing infrastructure, timing, and other factors. LCCA attempts to improve understanding of the real climate costs and benefits by including specific and local CO2 reductions in all estimations and consistently applying standard financial metrics that more accurately represent and compare costs. Investors and policy makers interested in climate, energy, and decarbonization must balance many competing options. The scenarios and analyses presented in this report can provide a foundation for wider analytical applications, and can help focus investments in innovation for hard-to-abate sectors, determine essential infrastructure required to facilitate market uptake, and estimate the value of grants in deployment. If the LCCA is not estimated, decision makers will not know the value of their policies and investments in terms of achieving greenhouse gas reductions and their carbon goals or the opportunity costs of taking one path over another. Finally, although carbon abatement costs are only one consideration of many in crafting climate policy (e.g., jobs, trade, domestic security), LCCA analysis will deploy efficient and effective approaches of GHG reduction and help avoid waste. This paper uses four scenarios to illustrate the discipline and value of LCCA analysis: first, the $/ton cost of using new solar power (utility or rooftop) to displace power-sector emissions in one market (California); second, the $/ton costs of new rooftop solar generation in several states with different solar resources, grid mixes, and policy environments; third, the $/ton cost of various technology options to decarbonize a range of primary iron and steel production methods; and fourth, the $/ton cost associated with sustainable aviation fuels and direct air capture and storage of CO2. The analysis provides insight into (a) the highest value for carbon reduction, (b) the relative discrete costs and benefits for decarbonization options, and (c) the potential shortfalls in policy or portfolio goals. In this context, the LCCA estimates for even simple cases can prove complicated depending on how emissions reductions are achieved. For example, our first scenario finds the costs of reducing emissions by replacing existing power generation in California with solar PV range from $60/ton (utility solar PV displacing natural gas power generation) to $300/ton (rooftop solar replacing a grid-average mix of generation) to more than $10,000/ton (any solar replacement of nuclear or hydropower). These large ranges are contingent on policy, investment, and/or technical decisions.
- Topic:
- Energy Policy, Natural Resources, Green Technology, and Carbon Emissions
- Political Geography:
- Global Focus
253. Potential Implications of the COVID-19 Crisis on Long-Term Electricity Demand in the United States
- Author:
- A.J. Goulding, Mugwe Kiragu, and David Nour Berro
- Publication Date:
- 10-2020
- Content Type:
- Working Paper
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- The ongoing COVID-19 pandemic has caused unprecedented changes in the ways people interact and approach economic activities. Electricity demand has declined and usage patterns have been altered, changes that could remain even after the pandemic ends. Failure to properly account for these declines in demand could lead to excess capacity in the electric power sector, added costs for consumers, and losses for investors. This paper, from the power sector program at Columbia University’s Center on Global Energy Policy, presents a methodology to quantify potential permanent reductions in demand triggered by the pandemic. The authors first identify how electricity demand changed in the United States following the 2008–2009 global financial crisis, or “Great Recession,” the last event to cause a major reduction in consumption. They then analyze the unique ways in which demand patterns may change over the next three to five years as a result of the coronavirus, followed by some illustrative calculations of the potential impact. Finally, the authors discuss the implications for policy makers with regard to electricity sector evolution. The paper finds that the COVID-19 crisis is likely to result in a long-term decline in annual electricity consumption, though less than that observed after the global financial crisis. It is also likely to accelerate changes in the structure of electricity demand that were already underway.
- Topic:
- Energy Policy, Electricity, Public Health, Pandemic, and COVID-19
- Political Geography:
- North America and United States of America
254. Engaging State-Owned Enterprises in Climate Action: Workshop Report
- Author:
- Philippe Benoit and Alex Clark
- Publication Date:
- 11-2020
- Content Type:
- Working Paper
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- On February 27, 2020, the Columbia University Center on Global Energy Policy (CGEP) convened a workshop at the university’s Faculty House in New York City. The workshop brought together a combination of practitioners, researchers, executives, and public sector officials to discuss the role of state-owned enterprises (SOEs) in realizing collective climate action goals. Under the Chatham House Rule, the discussion focused around sectors (power generation, oil and gas) and relationships (government-SOE relations, and the role of public financial institutions), before concluding with a roundtable discussion drawing together the day’s proceedings and outlining the next steps. The following is a summary of that workshop.
- Topic:
- Climate Change, Energy Policy, Natural Resources, and Governance
- Political Geography:
- Global Focus
255. Electricity Oversupply: Maximizing Zero-Carbon Power to Accelerate the Transition from Fossil Fuels
- Author:
- Melissa Lott and Julio Friedmann
- Publication Date:
- 11-2020
- Content Type:
- Working Paper
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- Decarbonizing and growing the power sector are critical steps to reducing greenhouse gas emissions in a cost-efficient and timely manner. As more renewable energy enters the market, the higher penetration of solar and wind sources means periods of temporary overgeneration are likely to increase. There are signs that renewable electricity oversupply is now actively being sought in order to create opportunities to decarbonize other sectors or build export markets for products derived from that additional energy. This commentary discusses the role of electricity in deep decarbonization efforts, and how zero-carbon oversupplies might be deployed. Policy makers must assess what public benefits to prioritize under this recent phenomenon. This commentary examines four countries—Germany, New Zealand, Saudi Arabia, and the United States—where excess generation is providing novel opportunities. The case of New Zealand is particularly illustrative of the choices countries and policy makers are facing. There, extra zero-carbon supply has suddenly appeared due to the closure of an aluminum smelter. The reduced load means this new abundance could be used to: expand the transmission infrastructure to feed electric loads elsewhere in the nation, decarbonize non-power sector applications (e.g., transportation or industry), produce and sell new products with near-zero carbon footprints (e.g., hydrogen, ammonia, chemicals, fuels), or operate machines that remove CO2 from the air and oceans.
- Topic:
- Energy Policy, Natural Resources, Electricity, Fossil Fuels, and Carbon Emissions
- Political Geography:
- Global Focus
256. ESG Investing and the Oil and Gas Industry: Moving Toward a Holistic Approach to Risk, Governance; Performance Measurement, Disclosure, and Results
- Author:
- Hon Xing Wong, Marianne Kah, and Erin Blanton
- Publication Date:
- 11-2020
- Content Type:
- Working Paper
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- On September 17, 2020, Columbia University’s Center on Global Energy Policy (CGEP) held a virtual workshop about environmental performance in the oil and gas industry. Investors, senior oil and gas industry executives, NGOs, and other stakeholders participated in this candid discussion about how environmental risks should be measured, disclosed, and incorporated into investment decisions.
- Topic:
- Energy Policy, Oil, Natural Resources, Gas, and NGOs
- Political Geography:
- Global Focus
257. Output-Based Rebates: An Alternative to Border Carbon Adjustments for Preserving US Competitiveness
- Author:
- Noah Kaufman, John Larsen, Ben King, and Peter Marsters
- Publication Date:
- 12-2020
- Content Type:
- Working Paper
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- Two linked and frequently raised concerns about putting a price on carbon dioxide emissions in the United States are whether such a tax would unintentionally advantage foreign competitors and, as a result, lead to increased emissions outside American borders. The tax could make American products more expensive than those made by companies in countries not imposing comparable climate regulations, which could lead to shifts in production overseas. Because a central aim of climate policy is to reduce global emissions, the “leakage” of production overseas would run counter to this goal. To avoid this outcome, carbon tax proposals commonly include a border carbon adjustment (BCA), which would impose the carbon tax on imported energy-intensive and trade-exposed products and provide a tax refund for exports of the same products. This commentary, part of a series of joint research on carbon tax policies by Columbia University’s Center on Global Energy Policy and Rhodium Group, highlights an alternative way to ensure that US firms remain on a level playing field with foreign competitors: output-based rebates (OBRs). While a BCA would focus on imports and exports, an OBR would instead compensate vulnerable US firms based on their production—a simpler process. Both BCAs and OBRs have their benefits and drawbacks, but nearly all carbon tax bills recently proposed in Congress included a BCA, and none included OBRs. This commentary reintroduces output-based rebates as an alternative to BCAs, analyzes US industries that could be compensated with OBRs, and estimates the costs of doing so. A border carbon adjustment is an appealing concept: simply apply the same carbon tax to foreign firms that is applied to domestic firms. The key advantage of OBRs is avoiding the most significant administrative hurdles of BCAs, including the complexities of determining the carbon content of foreign goods and providing foreign firms credit for climate regulations in their home countries. The proposed (but not passed) American Clean Energy and Security Act of 2009, commonly called the Waxman-Markey climate bill, included compensation for energy-intensive and trade-exposed (EITE) US firms with OBRs. This commentary uses the Waxman-Markey proposal as a guidepost to analyze the potential scope and costs of OBRs today.
- Topic:
- Energy Policy, Natural Resources, Carbon Tax, and Carbon Emissions
- Political Geography:
- North America and United States of America
258. Building a New Grid without New Legislation: A Path to Revitalizing Federal Transmission Authorities
- Author:
- Avi Zevin, Sam Walsh, Justin Gundlach, and Isabel Carey
- Publication Date:
- 12-2020
- Content Type:
- Working Paper
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- Zero-carbon electricity will be the backbone of a net-zero economy, not only keeping the lights on in our homes and offices but also powering our transportation systems and industrial processes. Indeed, research indicates that in order to decarbonize the economy at a reasonable cost and within a reasonable time frame, we must rapidly decarbonize and grow the power sector. Electricity—how it is generated, moved along the transmission and distribution grids, and used—is already undergoing a rapid transformation in the United States. This transition has been supported over the last decade by steep cost declines for wind, solar, and battery technologies as well as cheap natural gas produced via hydraulic fracturing. But the transition to a net-zero power sector needs to accelerate to mitigate climate change, which is already impacting the health of people around the country and world. New long-distance, high-voltage transmission lines will be vital if the United States is to deploy enough renewable generation capacity to decarbonize the power sector and to integrate it cost-effectively, as well as electrify our economy in time to meet the targets established in the Paris Agreement. Because Congress may not take timely action to remove barriers to these power lines, policy makers and the incoming Biden administration should explore how the federal government could use existing authorities to foster new long-distance transmission line development. This paper seeks to explain steps that the federal government—particularly from within the US Department of Energy and Federal Energy Regulatory Commission—could take to facilitate development of a future grid that is capable of supporting a reliable, affordable, and increasingly zero-carbon power sector. Consistent with the mission of the Center on Global Energy Policy at Columbia University SIPA to advance smart, actionable, and evidence-based energy and climate solutions through research, education, and dialogue, the goal in publishing this paper in partnership with NYU School of Law’s Institute for Policy Integrity is to provide insights that are useful to policy makers in the format and time frame needed. We hope that this report contributes to supporting informed dialogue on potential tools for building a sustainable power sector in the United States.
- Topic:
- Energy Policy, Natural Resources, Electricity, and Carbon Emissions
- Political Geography:
- North America and United States of America
259. How the US and China Could Renew Cooperation on Climate Change
- Author:
- Aimee Barnes, Fan Dai, and Angela Luh
- Publication Date:
- 12-2020
- Content Type:
- Working Paper
- Institution:
- Center on Global Energy Policy (CGEP), Columbia University
- Abstract:
- Averting global climate catastrophe depends in large part on progress by the world’s two greatest powers and emitters: the United States and China. However, relations between these two countries—particularly on climate action—have deteriorated over the past four years. With a new presidential administration set to enter the White House in January 2021, there is an opportunity for the US and China to build trust and cooperation on climate change in a way that supports a cooperative and dynamic bilateral relationship more broadly. This commentary takes a close look at the Biden-Harris presidential platform with respect to climate action and China, and assesses China’s domestic and international climate efforts, particularly with respect to the status of its 14th Five-Year Plan. Importantly, what emerges from this examination is a starting point for China and the US to improve their relationship through climate action and collaboration. China’s announcement that it would seek to achieve carbon neutrality by 2060 is an important step towards such cooperation.[1] The most promising potential areas for US-China cooperation fall into three broad categories: renewing a shared commitment to global climate governance under the Paris Agreement; building trust to enable renewed bilateral cooperation, such as on technology innovation and investments; and supporting subnational leaders' progress in both countries through platforms where they can productively convene. Recognizing that a climate-safe future is bound up in our mutuality, these two world powers can promote a new era of climate action and resiliency.
- Topic:
- Climate Change, Diplomacy, Energy Policy, Environment, and International Cooperation
- Political Geography:
- China, Asia, North America, and United States of America
260. Overcoming Coordination Gaps Between Water, Energy and Agriculture: Future Paths to Water Protection in Weser-Ems
- Author:
- Franziska Meergans, Christina Aue, Christian Knieper, Sascha Kochendörfer, Andrea Lenschow, and Claudia Pahl-Wostl
- Publication Date:
- 01-2020
- Content Type:
- Working Paper
- Institution:
- German Institute of Development and Sustainability (IDOS)
- Abstract:
- Intensive agriculture is characteristic for the region of Weser-Ems and the major source of nitrate pollution in groundwater. The analysis of coordination and cooperation shows that incoherent policies in the water, (bio)energy and agricultural sector have exacerbated the problem situation at hand.
- Topic:
- Agriculture, Energy Policy, Natural Resources, and Water
- Political Geography:
- Europe and Germany