Projected Effects of the Clean Competition Act of 2025

This report analyzes the projected impacts of the Clean Competition Act (CCA), which proposes a domestic performance standard and a carbon border adjustment mechanism (CBAM) for energy-intensive goods. Using the Global Economic Model (GEM), the authors assess how carbon fees on US manufacturers and analogous tariffs on imports would influence trade, revenues, and emissions. The policy is designed to incentivize lower emissions intensity by taxing carbon levels above a set industry benchmark. The findings suggest that the CCA would shift US imports toward less carbon-intensive countries, such as the UK and Japan, while reducing imports from higher-intensity producers like China, Mexico, and India.

The CCA is projected to significantly reduce global greenhouse gas emissions, with the United States leading the reductions through both improved manufacturing efficiency and decreased demand for energy-intensive goods. While the policy raises substantial government revenue, it also results in slightly lower domestic production in covered sectors like aluminum, steel, and cement due to increased costs for higher-intensity producers. The report notes that the tariffs provide a protective effect for cleaner US manufacturers, but the overall balance of effects leads to small declines in output across most covered and downstream industrial sectors.

Key projections and economic impacts include:

* Global emissions are projected to decrease by 81 million metric tonnes (MMt) in the first year, with US reductions accounting for 63 MMt.

* By the tenth year of the policy, annual global emissions reductions are projected to reach 140 MMt, with US reductions at 119 MMt.

* Total government revenue is projected to be $7.2 billion in the first year and reach $101 billion over the first ten years.

* Domestic output in covered sectors is projected to fall slightly, including cement by -0.02 percent, aluminum by -1.9 percent, and iron and steel by -0.6 percent.

* The policy results in a 0.6 percent output tax equivalent for domestic petroleum refining, contributing to a 0.3 percent rise in imports from zero-tariffed countries.

Rennert, Kevin, Mun Ho, Katarina Nehrkorn, and Milan Elkerbout. *Projected Effects of the Clean Competition Act of 2025*. Report 25-19. Washington, DC: Resources for the Future. December 2025. https://www.rff.org/publications/reports/projected-effects-of-the-clean-competition-act-of-2025/

Policies, Projections, and the Social Cost of Carbon: Results from the DICE-2023 Model

Abstract

The present study examines the assumptions, modeling structure, and preliminary results of DICE-2023, the revised Dynamic Integrated Model of Climate and the Economy (DICE), updated to 2023. The revision contains major changes in the carbon and climate modules, the treatment of non-industrial greenhouse gases, discount rates, as well as updates on all the major components. The major changes are a significantly lower level of temperature of the cost-benefit optimal policy, a lower cost of reaching the 2° C target, an analysis of the impact of the Paris Accord, and a major increase in the estimated social cost of carbon.

...

Table 7 and Figure 7 show estimates of the social cost of carbon (SCC). The SCC in the baseline run is $61/tCO2 for the 2020 period (in 2019 international $). This is above the SCC for the C/B (Cost/Benefit) optimal run of $53/tCO2 because damages are smaller in the C/B optimum. It is far below the SCC for the 2 °C run of $85/tCO2. The higher SCC in the temperature-limited run reflects the economic interpretation that a tight temperature limit is equivalent to a damage function with a sharp kink at the temperature limit and therefore to a sharply higher damage function above 2 °C. Note that the estimates of the SCC in the current DICE version are significantly above those in earlier vintages for reasons discussed in other sections, see particularly the next section. 

One of the most instructive findings involves the importance of discounting for the SCC and other policies. Table 7 shows the powerful impact of discounting on the SCC. The social cost of carbon at a 5% discount rate is two-thirds of the DICE C/B optimal estimate for 2020, while that of a 1% discount rate is 8 times the DICE C/B optimal estimate for 2020.

Additionally, Figure 8 compares estimates of the SCC with several other current values. The GIVE model is a comprehensive estimate prepared by researchers at Resources for the Future using probabilistic estimates of output and other components of damage estimates (Rennert et al., 2022). It uses a relatively low discount rate and has a relatively high social cost of carbon. A second set of estimates pertains to the SCC used by the federal government and prepared by an interagency working group. Figure 8 shows draft SCC estimates from EPA (2022) for both their overall assessment and specific to a damage module based on the DSCIM model (Climate Impacts Lab, 2022) for near-term discount rates from 1.5% to 2.5%. Conditional on discounting assumptions, the EPA estimates align very closely with those of DICE-2023. Figure 8 also shows a draft update (OMB, 2021) based on earlier methods and models which did not contain recommended methodological updates. This estimate is notably lower than the corresponding value in DICE-2023. The key takeaway from Figure 8 is the importance of the discount rate in determining the SCC.

A major change in the results of the DICE model over the years has been the rising estimates of the social cost of carbon. The original DICE-1992 model did not calculate a SCC, which came later to climate-change economics. However, rerunning the baseline scenario for the 1992 model gives an estimate of $18/tCO2 compared to $61/tCO2 in the 2023 model (in 2019$). The upward revision is a notable illustration of the evolving scientific understanding of damages, discount rates, and levels of output. Further research will provide a decomposition of the sources of the change in SCC due to different components.

by Lint Barrage & William D. Nordhaus

National Bureau of Economic Research (NBER) www.NBER.org

Working Paper 31112; Issue Date: April, 2023

https://www.nber.org/papers/w31112

India’s proposed Market-Based Economic Dispatch Mechanism Aims to Optimize Power Sector Resources

RMI analysis reveals potential daily savings of INR 1.5–4 crores per day across peak and off-peak seasons in Maharashtra and Tamil Nadu using the MBED mechanism.

RMI’s new report, Transforming India’s Electricity Markets: The Promises of Market-Based Economic Dispatch and the Path Forward, highlights key leverage points for successful implementation of wholesale market reforms that ensures long-term sustainable growth of the power sector in India.

The Indian power sector has evolved rapidly over the past decades, driving economic growth. Now, India has an opportunity to ensure electricity is procured reliably and efficiently, while paving the way for deployment of innovative and flexible power generation technologies. RMI emphasizes that India will need to reform existing wholesale markets to leapfrog toward increasing shares of renewable energy. This warrants a national impetus on resolving financial challenges in the distribution sector, including optimizing power sector resources to strengthen the country’s energy security.

The report outlines the Market-Based Economic Dispatch (MBED) mechanism, creating a shared understanding among stakeholders of the status and impact of proposed changes to India’s wholesale power market. The report provides a summary of the current market design in India, identifies the anticipated benefits of the MBED mechanism, and looks at key barriers toward implementation. It also shares lessons learned from international electricity markets and provides recommendations to successfully transition to the MBED mechanism in India’s power sector.

RMI’s analysis across two states demonstrates cost savings through the efficient dispatch of a pooled generator portfolio and finds potential system cost savings of INR 1.5–4 crore (US$184,000–US$491,000) per day over business-as-usual scenario.

MBED is a step toward creating a system that operates efficiently with an integrated pan-India approach for generators. The report demonstrates how India can ensure that the right electricity market operational structure is in place to develop a reliable, flexible, and cost-effective power sector. RMI Managing Director Clay Stranger said, “The MBED proposal is a key mechanism to optimize India’s power resources and it represents the next major opportunity to further India’s global leadership in advancing the innovative renewable energy sector.”

The full report can be accessed here: https://rmi.org/insight/transforming-indias-electricity-markets/

RMI www.RMI.org
Press Release dated March 1, 2023
https://rmi.org/press-release/indias-proposed-economic-dispatch-mechanism-aims-to-optimize-power-sector-resources/

New Vehicle Standards Will Produce Enormous Benefits for Consumers and the Climate

Updated pollution standards for cars and trucks will cut fuel costs and avoid up to a trillion dollars’ worth of climate-related damages

One April 13, 2023, the Environmental Protection Agency proposed new vehicle standards that will significantly reduce emissions of greenhouse gases and other criteria pollutants from the transportation sector. EPA’s multipollutant standards for light- and medium-duty vehicles sold in Model Years 2027 through 2032 will both reduce pollution and save consumers money—generating substantial societal benefits in the process.

Meredith Hankins, Senior Attorney at the Institute for Policy Integrity at NYU School of Law, issued the following statement: “EPA has a long history of using ambitious emission standards to protect public health, and today’s proposal adds to that history. The proposed standards for passenger vehicles are estimated to result in up to $1 trillion dollars in climate benefits, $280 billion in health benefits from reducing other pollution, and up to $770 billion in avoided fuel costs for consumers. This proposal, and the companion proposal for heavy-duty vehicles, recognize automotive manufacturers’ own commitments to electrify their fleets and build on Congressional incentives in the Inflation Reduction Act. EPA’s proposals represent an achievable path toward increasing the market-share of zero-emission vehicles.”

https://tinyurl.com/2lv9dfbe

Relatedly, the Institute for Policy Integrity filed an Amicus Brief Defending NHTSA Corporate Average Fuel Economy Standards on April 4, 2023.  They noted that in May 2022, the National Highway Traffic Safety Administration (NHTSA) finalized a rule to increase its corporate average fuel economy (CAFE) standards for passenger cars and light trucks for model years 2024–2026. A group of fuel and petrochemical manufacturers and states challenged the standards in the U.S. Court of Appeals for the D.C. Circuit, arguing primarily that the Energy Policy and Conservation Act bars NHTSA from including electric vehicles in the analytical baseline for the new standards. Their amicus brief explains that longstanding administrative guidance and case law direct agencies to develop baselines that reflect their best assessment of the real world absent any new agency action. In the context of this rulemaking, that guidance and case law required NHTSA to project how many and what kinds of vehicles—including electric (and plug-in hybrid electric) vehicles—would be built and sold if it did not issue new CAFE standards, which is what NHTSA did here. Their amicus brief also explains that NHTSA has consistently prepared baselines for prior CAFE standards in this manner.

The Institute for Policy Integrity at New York University School of Law, a non-partisan think tank dedicated to improving the quality of government decisionmaking. The institute produces original scholarly research in the fields of economics, law, and regulatory policy; and advocates for reform before courts, legislatures, and executive agencies. https://policyintegrity.org

Press Release dated April 13, 2023

https://policyintegrity.org/files/media/Vehicle_rule_press_release_2023.0412.pdf

https://policyintegrity.org/projects/update/amicus-brief-defending-nhtsa-corporate-average-fuel-economy-standards

Also see

Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles

A Proposed Rule by the Environmental Protection Agency on 05/05/2023

in the Federal Register

https://www.federalregister.gov/documents/2023/05/05/2023-07974/multi-pollutant-emissions-standards-for-model-years-2027-and-later-light-duty-and-medium-duty

The New Economics of Electrifying Buildings - An Analysis of Seven Cities - All-Electric New Homes: A Win for the Climate and the Economy

As states and cities across the United States work to cut carbon emissions from every sector, they’re starting to tackle a crucial transition: eliminating fossil fuels in buildings. Burning fossil fuels, primarily gas, to heat space and water and cook food poses a risk to climate goals and public health. Thus, spurring the shift to modern, electric appliances like heat pumps becomes critical.

...

Buildings are quickly becoming a cornerstone of ambitious climate policy, as policymakers recognize they can’t achieve the necessary science-based emissions reductions without tackling this stubborn sector. This means states and cities across the country won’t meet their climate goals if new buildings in their jurisdiction include fossil fuel systems that lock in carbon emissions over the 50 to 100-year building lifetime.

The cost of such an ambitious transition is often the first consideration. Thus, to help inform these crucial decisions, Rocky Mountain Institute updated and expanded their 2018 analysis, The Economics of Electrifying Buildings. They examined the economics and carbon emissions impacts of electrifying residential space and water heating, now with seven new cities and additional methodology changes. Today, we are releasing the first set of our findings examining newly constructed single-family homes. In every city we analyzed, a new all-electric, single-family home is less expensive than a new mixed-fuel home that relies on gas for cooking, space heating, and water heating. Net present cost savings over the 15-year period of study are as high as $6,800 in New York City, where the all-electric home also results in 81 percent lower carbon emissions over the mixed-fuel home.

Key Findings

The new all-electric, single-family home has a lower net present cost than the new mixed-fuel home in every city we studied: Austin, TX; Boston, MA; Columbus, OH; Denver, CO; Minneapolis, MN; New York City, NY; and Seattle, WA.

• In most cities, the mixed-fuel home (with gas furnace, water heater, air conditioning, and new gas connection costs) has a higher up-front cost than the all-electric home, which uses a heat pump system for both heating and cooling. This is true in Austin, Boston, Columbus, Denver, New York, and Seattle. The Minneapolis climate requires a higher capacity heat pump than other cities in the study. This comes at a higher cost, outweighing the equipment and labor cost savings seen with heat pump systems in milder climates.
• There are significant energy savings with the heat pump space and water heater over corresponding gas appliances, resulting in a lower annual utility cost for the all-electric home in most cities—up to 9 percent lower in Minneapolis. The two modeled scenarios have nearly equivalent utility bills in Boston and Seattle.
• The all-electric home results in substantial carbon emissions savings over the mixed-fuel home in all cities. The greatest savings are found in Seattle (93 percent) and New York City (81 percent). Minneapolis, Columbus, Boston, and Austin all save more than 50 percent over the lifetime of the equipment compared with the mixed-fuel home.

Context and Methodology

Cities in California, Washington, New York, and Massachusetts have all passed laws or adopted codes mandating or encouraging all-electric new building construction. Regional coalitions across the country are forming to extend lessons learned from these first movers to other states, including in New England and the Midwest.

Thus, we extended our Economics of Electrifying Buildings research to assess the economic case for electrification in a variety of climate zones. Several of these states are actively considering new policies or incentives to spur the transition to all-electric buildings.

In partnership with Group 14, we have updated our methodology from the 2018 report to be more readily replicable in support of building decarbonization policy decisions across the United States, incorporating the following:

• A thorough energy use calibration for each scenario to end-use breakdown, energy use intensity, and gas/electricity fuel split with the latest available Energy Information Administration Residential Energy 
• Consumption Survey data by climate region
• A 15-year greenhouse gas emissions comparison that incorporates data from both the US EPA and NREL’s Regional Energy Deployment System model to project changes in carbon intensity for electricity consumed in each state through 2036
• RSMeans construction costing factors to account for location-specific variability in up-front cost
• Building industry performance standards from ASHRAE for HVAC systems, EnergyStar for household appliances, and WaterSense for potable water fixtures

Policy Implications

Our analysis shows that all-electric new construction is more economical to build than a home with gas appliances, regardless of location. Given these findings, policymakers should embrace policies that incentivize or mandate all-electric residential new construction. In addition, they should prioritize complementary policies that address several obstacles that are impeding widespread adoption of all-electric homes. We suggest the following actions:

• Educate contractors. Our research finds that there is low contractor comfort with heat pump systems for year-round heating in cities with severe winter climates, a notion that persists from an era of older technology. Today, there are cold-climate heat pumps designed to address concerns of low capacity and efficiency in cold temperatures, best practice design guidelines, and case studies proving the efficacy of cold-climate heat pumps.To promote contractor readiness as all-electric building codes come online, policymakers and regulatory agencies should establish contractor trainings on heat pump technologies (see for example, NYSERDA’s Clean Energy Workforce Development program and San Jose’s Educational Program). For high rates of participation, ensure attendees have a reason to attend. Some jurisdictions have considered paying participants for their time. Others have allowed trained participants to be added to a qualified contractors list.
• Educate consumers and developers. Consumers and developers are increasingly knowledgeable about modern, efficient heating and cooking technology like heat pumps and induction stoves. But their comfort with the technologies must be fostered to realize the unprecedented market expansion that is needed in the next 10 years to align the buildings sector with our global climate goals.Policymakers and regulatory agencies should establish education campaigns for residents and building developers about the health, economic, and climate benefits of all-electric homes. Familiarizing consumers with induction cooking is a particularly important issue with a variety of novel solutions (see for example, San Jose’s Induction Cooktop Checkout Program).
• Update gas line extension allowances. Typically, gas utilities offer an allowance to compensate a portion of the cost of a new customer gas service extension, with the remainder paid by the customer or developer of the new property. Our research finds that the allowance is highly variable: it could be as low as $1,000 or higher than $5,000, in some states covering the total cost to connect the gas pipeline to a new home. Gas utility customers bear the cost of this allowance over time, therefore socializing the cost of unnecessary, uneconomic infrastructure that is not aligned with air quality, health, or climate goals. Regulatory agencies should reassess these allowances as a part of their transition planning and management of stranded asset risk.
• Address the split incentive challenge through creative financing. In Boston and Seattle, the all-electric home has a lower cost to build, but a slightly higher cost to operate. To ensure that all consumers benefit from the up-front cost savings for all-electric homes, home mortgages could be amortized in a manner to reduce the monthly payments to compensate for higher bills. Additionally, utility regulators and policymakers should work to make the cost of gas reflect the societal cost of greenhouse gas emissions or health impacts. This can be done through a greenhouse gas emissions tax, an air quality/health impacts adder, or an increase in permitting costs for extraction and transport of fossil fuel.

This is the first release of in the new Economics of Electrifying Buildings series. Later this year, we will release findings for single-family retrofits. In early 2021, we plan to provide a detailed technoeconomic analysis for multifamily buildings, examining the case for all-electric new construction and retrofits in all seven cities.

Austin: Single-Family Homes

RMI analyzed the costs of a new all-electric home versus a new mixed-fuel home that relies on gas for cooking, space heating, and water heating. In Austin, the all-electric home saves $4,400 in net present costs and 15 tons of CO2 emissions over a 15-year period.

Key Findings
The new all-electric home has a lower net present cost than the new mixed-fuel home, presenting savings on both up-front costs and utility bills.
• A mixed fuel home (with gas furnace, water heater, air conditioning, and new gas connection costs) has a higher up-front cost than the all-electric home, which uses the heat pump system for both heating and cooling.
• The all-electric home has 7% lower annual utility costs. There are significant energy savings with a heat pump space and water heater over corresponding gas appliances, even though electricity is significantly more expensive than gas per unit energy in Austin.
• Carbon emissions from heating, water heating, and cooking are 65% lower over the appliance lifetime in the all-electric home, due to more efficient appliances and increasingly low-carbon electricity.

Boston: Single Family Home
RMI analyzed the costs of a new all-electric home versus a new mixed-fuel home that relies on gas for cooking, space heating, and water heating. In Boston, the all-electric home saves nearly $1,600 in costs and 51 tons of CO2 emissions over a 15-year period.

New Report Finds Current Transmission Interconnection Process Unworkable and Inefficient, Raising Energy Costs for Customers and Stifling Job Creation

On January 12, 2021 a report was released that shows that the current system for interconnecting generators to the transmission grid is unworkable and inefficient, creating a backlog of unbuilt energy projects. These lengthy interconnection queues have resulted in increased electricity costs for consumers, delayed rural economic development and job creation, and an added difficulty for clean energy projects looking to be connected to the nation’s grid.

Sponsored by Americans for a Clean Energy Grid as part of the Macro Grid Initiative, Disconnected: The Need for a New Generator Interconnection Policy examines the current interconnection process and finds that current policies governing queues are excessively costly, slow, and unpredictable. At the end of 2019, 734 gigawatts of proposed generation — 90 percent of which are new wind, solar, and storage projects — were waiting in interconnection queues nationwide.

“Connecting to the transmission grid is like spending four years at the Department of Motor Vehicles, except the costs are much less predictable. FERC’s interconnection policy was created in a different era and it no longer works,” said Rob Gramlich, co-author and Executive Director of Americans for a Clean Energy Grid.

The report finds that the current interconnection backlog is:

• Increasing electricity costs for American homes and businesses by delaying the construction of new energy projects, which are cheaper than existing electricity production.
• Harming rural economic development and job creation as most new energy projects are located in remote, rural areas.
• Delaying or preventing state, utility, and Fortune 500 companies from reaching their decarbonization commitments by backlogging the development of new renewable energy projects.
• Continuing to expose Americans, especially those in marginalized communities, to the harmful impacts of smog, nitrogen oxide, sulfur oxide, fine particulate matter, and carbon dioxide pollution, which are usually associated with older forms of energy production.

“This report further demonstrates the urgency in which we need to upgrade and reform our transmission system,” says Jay Caspary, co-author and Vice President at Grid Strategies LLC. “We won’t be able to access the benefits of new, clean energy projects by relying on incremental, evolutionary reforms to generator interconnection processes.”

Currently, large transmission upgrades rely on participant funding and network planning, creating a situation in which project developers are charged with paying for transmission upgrades despite the fact that there are broad-based, regional benefits. To address this problem, the report argues that FERC and other planning authorities should discontinue the policy of participant funding for new generation and implement an up-front planning system that expands and improves regional and interregional transmission planning to be proactive, incorporate future generation additions and retirements, and spread costs to all beneficiaries.

“Backlogs in interconnection queues have emerged as a significant challenge to the growth of renewable energy, even as consumer demand increases for low-cost wind and solar projects,” said Gregory Wetstone, President and CEO of the American Council on Renewable Energy (ACORE). “This important new report highlights the shortcomings of current interconnection policies and proposes sensible solutions for substantive reform. The renewable energy growth enabled by these policy changes is essential to efforts to address the climate challenge.”

Executive Summary

America’s system for planning and paying for the nation’s transmission grid is causing a massive backlog and delay in the construction of new power projects. While locally produced electric power is gaining in popularity, most of the lowest cost new power production comes from projects which are located in rural areas and, thus, depend on new electricity lines to deliver power to the urban and suburban areas which use most of the nation’s power. Project developers must apply for interconnection to the transmission network, and until the network capacity is expanded to accommodate the resources, the projects must wait in an “interconnection queue.” At the end of 2019, 734 gigawatts of proposed generation were waiting in interconnection queues nationwide.

This massive backlog has multiple negative impacts on the nation. First, it needlessly increases electricity costs for America’s homes and businesses in two ways: (1) it slows or prevents the adoption of new power sources which are cheaper than existing power generation; and (2) it also significantly increases the costs of each new power source. Americans for a Clean Energy Grid’s (ACEG) recent study demonstrates that a comprehensive approach to building transmission to connect remote power resources to electricity load centers in the Eastern half of the U.S. can cut consumers electric bills by $100 billion and decrease the average electric bill rate by more than one-third, from over cents/kWh  today to around 6 cents/kWh by 2050, saving a typical household more than $300 per year.

Second, because the lowest cost proposed power projects are often located in rural areas, this backlog is blocking rural economic development and job creation. In addition, rural power projects expand the tax base of local communities and typically generate lease payments or other revenue for farmers and other landowners. New transmission in the Eastern half of the U.S. alone will unleash up to $7.8 trillion in investment in rural America and create more than 6 million net new domestic jobs.

Third, almost 90 percent of the backlog is for wind and solar projects, thus blocking the resources which dominate new electricity production, reflecting the changing resource mix in the power sector and America’s abundance of high-quality renewable resource areas where the sun shines bright and the wind blows strong. The U.S. Energy Information Administration (EIA) projects wind and solar will account for 75 percent of new electricity generation in 2020.5 Many states, utilities, Fortune 500 companies and other institutions have adopted large commitments or requirements to scale up their renewable energy use or reduce their carbon pollution and this backlog may delay or impede achievement of these commitments or requirements. In addition, delays in developing these projects unnecessarily exposes Americans, especially those in environmental justice communities, to the harmful impacts of smog, and nitrogen oxide, sulfur dioxide, fine particulate and carbon dioxide pollution.

IV. Evidence of a Broken Interconnection Policy

a) Upgrade costs assigned to customers are high

Analysis by Lawrence Berkeley National Laboratory, shown in tables 1 and 2 below, indicates that the costs to integrate new resources, not just renewable projects, have reached levels that are unreasonably high for a developer to proceed in MISO and PJM. As expected, the costs for integrating new resources in MISO are rising substantially relative to previous years, indicating that the large-scale network has reached its capacity and needs to expand to connect more generation. In other words, much more than “driveway” type facilities are needed; larger roads and highways are required to alleviate the traffic. Table 137 below shows that historically, interconnecting wind projects have incurred interconnection costs of $0.85 per megawatt hour (MWh) or $66 per kilowatt (kW). However, newly proposed wind projects now face interconnection costs that are nearly five times higher, at $4.05/MWh or $317/kW. For reference, this is about 23 percent of the capital cost of building a wind project.

New solar projects in MISO South have much higher upgrade costs. The most recent 2019 system impact study for solar projects in MISO South estimated upgrade costs to total $307/kW, with upgrade costs for individual interconnection requests as high as $677/kW.

The rapidly increasing cost of interconnection in recent years shows that the breaking point has been reached. MISO, for example, has reported that “...interconnection studies for new generation resources in MISO’s West sub-region have indicated the need for network upgrades exceeding $3 billion to accommodate the initial queue volume, and a similar trend is expected to occur in other areas with high wind and solar potential, including MISO’s Central and South sub-regions.” Figure 2 below illustrates the large increase in assigned network upgrade costs to generators in MISO West, from approximately $300/kW in 2016 to nearly $1,000/kW in 2017. The costs to build proposed wind projects will likely result in developers abandoning those resources as project integration costs exceed $100/kW.

The Benefits and Costs of Decarbonizing Costa Rica's Economy

Costa Rica's National Decarbonization Plan (NDP) sets the ambitious goal for the country to become carbon-neutral by 2050 and lays out a wide range of policy and institutional reforms to achieve this goal. The authors of this report developed an integrated model that estimates the benefits and costs of implementing the NDP in all major sectors, informed by consultations with numerous government agencies, industries, and nongovernmental organizations, and used it to evaluate whether the NDP makes economic sense for Costa Rica — that is, whether the benefits of the NDP exceed its costs.

The authors' analysis suggests that under the vast majority of plausible assumptions about the future, the NDP would achieve or nearly achieve its greenhouse gas emissions reduction goals and do so at a net economic benefit. Conversely, without a concerted focus and investment in decarbonization, Costa Rica's greenhouse gas emissions will increase substantially.

The findings from this study can play an important role in ensuring that the implementation of the NDP is robust — meaning that it will achieve its goals in the uncertain future. This analysis confirms which lines of action are most critical to the success of the NDP — transport and land use — and identifies some key conditions necessary to achieve close to zero net emissions at a large net economic benefit. This study also offers ideas and models that are valuable for other countries interested in decarbonization, and that can inspire development partners globally.

Key Findings

• Under baseline assumptions, decarbonization would yield $41 billion in net benefits to Costa Rica between 2020 and 2050, using a 5 percent discount rate.
• Under all but 22 of the more than 3,000 plausible futures considered, implementation of the decarbonization plan would lead to economic benefits that exceed the costs.
• Currently, electricity is almost completely renewable, and with modest investments it would provide nearly emissions-free energy to support the electrification of much of Costa Rica's economy.
• In the transport sector, significant emissions reductions are possible through electrification of transport and shifting to public transportation. The economic benefits from energy savings, fewer accidents, time saved from reduced congestion, and the reduced negative impacts of air pollution on health more than compensate for the initially higher up-front costs of switching to electric vehicles and building infrastructure for zero-emissions public transport.
• Reducing emissions in agriculture and livestock could lead to increased productivity, and increasing carbon sequestration by forests would increase valuable ecosystem services, such as renewable forestry products, water and soil benefits, and support for tourism and cultural heritage.
• Emissions reductions from buildings, industry, and the waste sector are also important to reach zero net emissions and together provide modest net benefits through energy cost savings, increased productivity, and the value of treating and recycling and reusing liquid and solid waste.

Recommendations

• Costa Rica should continue implementing its NDP to both meet its international obligations to decarbonize and facilitate an economic transition that would very likely lead to large net benefits and contribute to a sustainable COVID-19 pandemic recovery.
• As Costa Rica recovers from the COVID-19 pandemic, it should focus on decarbonization investments that would reactivate the economy and provide support to the most critically affected sectors of the economy.
• Costa Rica should monitor the costs of alternative-fuel vehicles, as well as the adoption of improved public transportation options, and make adjustments to the transport decarbonization strategies as needed to ensure net economic benefits and sufficient emissions reductions.
• As Costa Rica continues to manage its forests for long-term sustainability, it should measure and monitor ecosystem service benefits in order to best target the NDP interventions.
• Costa Rica should continue to develop more-detailed proposals for implementing the plan and reevaluate benefits and costs periodically to ensure the greatest net benefits, including by aligning its Nationally Determined Contribution to the NDP.

...

Our analysis suggests that, under baseline assumptions, implementing the NDP would lead to net-zero GHG emissions by 2050 and provide about $41 billion of net benefits across the economy from 2020 to 2050, discounted back to 2015 at a rate of 5 percent per year.3 It would save or otherwise provide $78 billion in benefits, and it would cost about $37 billion. There is significant uncertainty around these estimates, but the analysis shows that under the vast majority of plausible assumptions about the future, the NDP would achieve or nearly achieve its emissions reduction goals and do so at a net economic benefit.

Under baseline assumptions, fully implementing all lines of action in the NDP would lead to about $41 billion in net benefits (Figure S.2). The greatest benefits are due to actions affecting transport,  agriculture, livestock, and forestry net emissions. In the agriculture, livestock, and forestry sectors, ecosystem services provided by forests, such as renewable forestry products, water and soil benefits, support for tourism and cultural heritage, and improved yields are worth much more than the investments required to decarbonize and the forgone value of land dedicated to forests—providing discounted net benefits of about $22 billion. The public and private transport sectors together with the freight sector would provide $19 billion in net benefits under baseline assumptions, since the economic benefits from energy savings, fewer accidents, time saved from reduced congestion, and the reduced negative impacts of air pollution on health more than compensate for the initially higher up-front costs of switching to electric vehicles and building infrastructure for public transport (Godínez-Zamora et al., 2020). Efficiency gains in industry, and the economic value of recycled materials and treated wastewater, result in a small net benefit for the industry and waste sectors: $1.3 billion together. Figure S.2 shows modest net costs for the electricity and buildings lines of actions. However, the benefits of cheaper electricity are accounted for under the transport, industry, and buildings sectors.

https://www.rand.org/pubs/research_reports/RRA633-1.html

by David G. Groves, James Syme, Edmundo Molina-Perez, Carlos Calvo Hernandez, Luis F. Víctor-Gallardo, Guido Godinez-Zamora, Jairo Quirós-Tortós, Felipe De León, Andrea Meza Murillo, Valentina Saavedra Gómez, Adrien Vogt-Schilb

Rand www.Rand.org

 

Local Sectoral Specialization in a Warming World

Abstract:

This paper quantitatively assesses the world's changing economic geography and sectoral specialization due to global warming. It proposes a two-sector dynamic spatial growth model that incorporates the relation between economic activity, carbon emissions, and temperature. The model is taken to the data at the 1° by 1° resolution for the entire world. Over a 200-year horizon, rising temperatures consistent with emissions under Representative Concentration Pathway 8.5 push people and economic activity northwards to Siberia, Canada, and Scandinavia. Compared to a world without climate change, clusters of agricultural specialization shift from Central Africa, Brazil, and India's Ganges Valley, to Central Asia, parts of China and northern Canada. Equatorial latitudes that lose agriculture specialize more in non-agriculture but, due to their persistently low productivity, lose population. By the year 2200, predicted losses in real GDP and utility are 6% and 15%, respectively. Higher trade costs make adaptation through changes in sectoral specialization more costly, leading to less geographic concentration in agriculture and larger climate-induced migration.

...

These Trees Are Not What They Seem - How the Nature Conservancy, the world’s biggest environmental group, became a dealer of meaningless carbon offsets

At first glance, big corporations appear to be protecting great swaths of U.S. forests in the fight against climate change.

JPMorgan Chase & Co. has paid almost $1 million to preserve forestland in eastern Pennsylvania. Forty miles away, Walt Disney Co. has spent hundreds of thousands to keep the city of Bethlehem, Pa., from aggressively harvesting a forest that surrounds its reservoirs.  Across the state line in New York, investment giant BlackRock Inc. has paid thousands to the city of Albany to refrain from cutting trees around its reservoirs.

... By funding the preservation of carbon-absorbing forests, the companies say, they’re offsetting the carbon-producing impact of their global operations. But in all of those cases, the land was never threatened; the trees were already part of well-preserved forests.... By taking credit for saving well-protected land, these companies are reducing nowhere near the pollution that they claim.

The Nature Conservancy recruits landowners and enrolls its own well-protected properties in carbon-offset projects, which generate credits that give big companies an inexpensive way to claim large emissions reductions. In these transactions, each metric ton of reduced emissions is represented by a financial instrument known as a carbon offset. The corporations buy the offsets, with the money flowing to the landowners and the Conservancy. The corporate buyers then use those credits to subtract an equivalent amount of emissions from their own ledgers.

https://www.hawkmountain.org/visit/hiking/accessibility/silhouette-trail

The market for these credits is booming, according to BloombergNEF.... In the first 10 months of this year, companies used more than 55.1 million carbon credits to offset their emissions (equivalent to the pollution from 12 million cars), a 28% increase from the same period in 2019. While some of these credits are paying for projects that are truly reducing emissions, an unknown number represent inflated claims.

Few have jumped into this growing market with as much zeal as the Nature Conservancy,... protecting more than 125 million acres. Last year its revenue was $932 million, which eclipsed the combined budgets of the country’s next three largest environmental nonprofits.

Danny Cullenward, a lecturer at Stanford and policy director at CarbonPlan, a nonprofit that analyzes climate solutions says.if the Conservancy is enrolling landowners who had no intention of cutting their trees ... “they’re engaged in the business of creating fake carbon offsets.”

The Conservancy defends its carbon-offset projects, saying that all adhere to peer-reviewed methodologies developed by independent registries and that each project is validated by third-party auditors.

...

A forested ridge, 80 miles northwest of Philadelphia, ... claimed as a protectorate of JPMorgan and other corporate patrons, ... generates carbon credits.... These 2,380 acres of trees have absorbed almost a half-million tons of carbon dioxide, storing it in their trunks, stems, and roots. If not for payments for carbon offsets ... This would be jeopardized, according to documents for the project, developed by the Nature Conservancy and Blue Source LLC, a carbon-project development company. Aggressive timber harvesting could “feasibly occur,” the documents say, wiping out about 89% of the living trees in only five years.... The landowner generates hundreds of thousands of carbon offsets—worth millions of dollars—over a two-decade period. JPMorgan has ... acquired more than 96,000 of the offsets, which  ... help erase the emissions from its employees’ air travel.  But this ... ridge wasn’t in peril. Ninety years ago hunters congregated on these mountains each fall to shoot the hawks for sport.  Rosalie Edge, a philanthropist ... acquired the land, hired a warden, and kicked out the hunters in the 1930s. Edge created a nonprofit ... to preserve the forested land as natural habitat for the migrating birds.  The trees have remained untouched for 85 years. Hawk Mountain has become wildly popular with researchers and birdwatchers, with 60,000 visitors each year. The nonprofit has grown into a $3 million organization.... The additional revenue from the carbon-offset program helps them take better care of the land, plant more saplings, and improve the forest’s health.... The project documents show almost all of the credits come from the assumption that the land would have been heavily harvested. However, the nonprofit had no intention to cut down most of its trees.

ACR, like other carbon registries, says it’s impossible to predict how lands will be managed in the future and prefers to compare the forested properties to nearby parcels, including those run by commercial timber harvesters.

... Carbon can gets reduced by spending $200 a ton capturing CO2 from the exhaust of a coal-burning power plant in China or one-tenth that amount planting trees to absorb the gas in Chile.   By allowing companies or governments to pay—and take credit for—cheaper emissions reductions beyond their fence lines, the cost of addressing climate change becomes less formidable. It also allows industries with little flexibility, such as airlines, where cleaner biofuels aren’t yet widely available to power fleets, to start taking action to reduce their net emissions.

...

Delta Air Lines Inc., for instance, earlier this year vowed to allocate $1 billion over the next decade, much of it on carbon offsets, to zero out the greenhouse gas emissions from its hundreds of aircraft. Royal Dutch Shell Plc says it’s spending $300 million over three years on projects that will eventually generate offsets by increasing the amount of carbon trees and soil absorb. And Microsoft Corp. and Google recently vowed to erase all of the historic carbon emissions from their operations, which will require them to buy millions of offsets (most cost about $8 to $10 per credit).

Some experts say this is just the beginning. Offsets will need to grow by at least fifteenfold if the world is to have any chance of zeroing out all its carbon emissions by 2050, says Mark Carney, special envoy on climate action and finance to the United Nations, who started a task force in September to help boost the credibility and supply of offsets.

Academics have worried for years about the validity of many forest offset projects, because it’s difficult to predict what would have happened without carbon revenue. But some nonforest projects clearly show how offsets can be effective. For instance, Stripe, a San Francisco-based technology company, recently paid $775 per ton to Climeworks AG, a Swiss company that uses renewable geothermal energy to capture CO2 from the air, concentrate it, and store it underground in rock formations. In this case, the carbon payment from Stripe is causing the reduction to happen, because there is no other reason for Climeworks to carry out this expensive process. (It hopes to drive that cost down to $100 to $200 per ton.)

Reaching Net Zero Emissions In Virginia Could Increase State GDP More Than $3.5 Billion Per Year

When Governor Ralph Northam signed the Virginia Clean Economy Act (VCEA) into law this April, the state joined the vanguard of U.S. states enacting ambitious policy to transition from fossil fuels to a clean energy economy. But while the VCEA would significantly decarbonize Virginia’s power sector by 2050, it will still fall short of the emissions reductions needed for a safe climate future.

New modeling using the Virginia Energy Policy Simulator (EPS), developed by Energy Innovation and Rocky Mountain Institute, estimates the VCEA will reduce power sector emissions nearly 64% and cut economy-wide emissions 26% by 2050 compared to business-as-usual. While the VCEA puts Virginia on the path to significant decarbonization, it does not cover the rest of the state’s economic sectors, and falls short of the Intergovernmental Panel on Climate Change’s recommended pathway to limit warming to 1.5° Celsius for a safe climate future.

...

[The general Energy Policy Simulator available for other regions is available at https://us.energypolicy.solutions/ and more fully described  in a blog post at https://tinyurl.com/yajhwfw7 ]

Percent GDP Change in a Net Zero Scenario - U.S.

... A more ambitious policy package that implements climate policies across the transportation, buildings, industrial, land, and agricultural sectors could put Virginia on a 1.5°C pathway and generate massive economic benefits: By 2050, this scenario could achieve net-zero emissions, generate more than 12,000 job-years, and increase state GDP by more than $3.5 billion per year.

Virginia’s second-largest source of emissions is the electricity sector. Before the VCEA was enacted, the state’s power sector emissions were projected to grow from roughly 30 million metric tons of carbon dioxide-equivalent (MMT CO2e) in 2019 to about 35 MMT CO2e in 2050.

The VCEA will spur significant electricity sector emissions reductions by requiring the state’s investor-owned utilities to decarbonize, including requiring Dominion to achieve 100 percent carbon-free electricity by 2045 and Appalachian Power to achieve 100 percent carbon-free electricity by 2050. It also requires closing nearly all coal-fired power plants by 2024 and most natural gas, biomass, and petroleum-fired power plants by 2045.

The VCEA would also [increase] Virginia’s renewable energy industry with targets for 5,200 megawatts (MW) of offshore wind by 2034, 3,100 MW of energy storage capacity by 2035, and significant energy efficiency growth....Virginia currently has 2,300 MW of installed renewable energy capacity....

...

Transportation is the largest current source of statewide emissions, followed by industry and buildings as the third- and fourth-largest greenhouse gas contributors....

Modeling of the VCEA and 1.5°C pathway was conducted using the open-source and peer reviewed Virginia EPS computer model, which allows users to estimate climate and energy policy impacts on emissions, the economy, and public health.... 

This policy package would reduce economywide emissions 63% below 2005 levels by 2030 and achieve net-zero emissions before 2050.... In addition to the economic benefits, the scenario would reduce harmful air pollution, creating health benefits for Virginians.

... The Virginia EPS ... [requires] all new passenger cars sold to be electric by 2035, and all new trucks to be electric by 2045. This standard aligns with California’s transportation sector policies and the multi-state Memorandum of Understanding on moving to zero emissions medium and heavy duty vehicles that 17 states follow. The scenario also includes investing in alternatives to passenger car travel, with supportive land use and transportation policies that empower people to use public transit or walk and bike, resulting in a 20% passenger car travel reduction by 2050.

In the buildings sector, a sales standard requiring all newly sold building equipment to be electric by 2030 would shift gas space and water heating systems to all-electric heat pumps, which are already commercially available and common in many parts of the U.S. Strong efficiency standards (potentially state standards on new equipment sales, a utility rebate program, or a statewide energy efficiency resource standard) further improve the efficiency of newly sold building equipment.

The Virginia EPS 1.5°C pathway ...covers the entire electricity sector (including municipal and cooperative utilities) and targets 100% clean power [earlier], by 2035. The VCEA’s offshore wind, energy storage, and power plant closure requirements are also included along with additional policies to expand the transmission system, spur demand response, and add even more storage for valuable grid flexibility.

Virginia’s industry sector emissions come from [leaks].... To reduce energy-related emissions, the scenario requires industrial facilities electrify all end-uses where possible, to switch to a zero-carbon fuel (in this case hydrogen) for all others by 2050, and for the hydrogen to be produced through the zero-carbon process known as electrolysis. Policies promoting more efficient use of industrial materials and improved industrial energy efficiency achieve additional reductions.

...

By 2050, this scenario would generate more than 12,000 job-years and increase Virginia’s GDP by more than $3.5 billion per year.

Moving away from fossil fuels also improves air quality by reducing particulate matter emissions and other pollutants that harm human health – [avoiding] more than 16,000 asthma attacks per year by 2050.

...

by Silvio Marcacci, Communications Director at Energy Innovation a nonpartisan climate policy think tank helping policymakers make informed energy policy choices and accelerate clean energy by supporting the policies that most effectively reduce greenhouse gas emissions.

FOR FULL STORY GO TO:

https://tinyurl.com/y87s5ntw

https://www.forbes.com/sites/energyinnovation/2020/12/09/reaching-net-zero-emissions-in-virginia-could-increase-state-gdp-more-than-35-billion-per-year

Forbes www.forbes.com

December 9, 2020

Also see Greentech Media's coverage at https://tinyurl.com/y7zvgj8y

It’s official: Alberta’s oilsands tailings ponds are leaking. Now what?

A years-long international investigation has found ‘scientifically valid evidence’ the massive pits that store toxic waste in the oilsands are leaking, leaving Albertans wondering who’s going to clean them up

There are more than a trillion litres of toxic oilsands waste stored in tailings ponds near Alberta’s Athabasca River — and they’re leaking.

...

Not only that, the Commission for Environmental Cooperation report noted there is evidence tailings fluids “may circumvent [containment] systems and contaminate aquifers” and end up in the groundwater.

...

“It’s making its way to the groundwater, so is it making its way to our surface water? Is it making its way to the foods and wildlife that we rely on for subsistence purposes, our traditional foods? Are we consuming it?”

The answers to these questions are largely unknown, which is a big part of the problem.
...

Minister of Environment and Climate Change Canada Jonathan Wilkinson ... noted an additional $46 million in funding has been allocated to the federal environmental enforcement agency. But the federal government has so far been reluctant to punish oilsands companies for leaking tailings ponds.

And despite years of uncertainty, the federal government still hasn’t created regulations for the release of tailings fluids into waterways.

Tar sands tailings

 - Pembina Institute - https://tinyurl.com/ydc8xbuq

According to the Alberta Energy Regulator, “tailings are a mixture of sand, clay, water, silts, residual bitumen and other hydrocarbons, salts and trace metals.”

...

The total area of the tailings ponds has increased from around 25 square kilometres in 1985 to over 250 square kilometres in 2016, nearly double the size of the city of Vancouver. 

As for the amount held in the tailings ponds — well, that’d be around 1.25 trillion litres as of 2018. That’s up almost 200 billion litres from 2014. Wondering how much 1.25 trillion litres is? That’d be enough drinking water for a million people for 1,700 years.

As the factual record notes, “freshly produced [tailings fluid] is a substance acutely toxic to aquatic organisms.” 

Part of the mix, known as fine fluid tailings, remains suspended in water and can take decades to slowly settle to the bottom of a body of water.

...

Tailings ponds are often very close to the Athabasca River. The Commission for Environmental Cooperation report includes information from Syncrude that estimates approximately 785 million litres of tailings fluid “migrated” past collection ditches in 2017. 

...

Suncor pointed The Narwhal to a prepared statement, which noted “as a whole, the industry spends approximately $50 million each year on monitoring in the region, with an additional $130 million per year on site-specific monitoring. To date, these programs have not indicated an adverse impact to the Athabasca River from the oilsands industry.”

...

The report found indications industry and government have known tailings ponds leak since the early days of oilsands development in the Athabasca region, citing a study dating back to 1973.

...

How expensive will it be to clean up Alberta’s tailings ponds one day?

The Alberta Energy Regulator tracks the estimated cost of reclaiming oilsands mines, based on figures submitted by industry. Its most recent estimate of total liabilities associated with oilsands mines is $30.81 billion.

That price tag is largely related to cleaning up the tailings ponds, according to experts.

FOR FULL STORY GO TO

https://thenarwhal.ca/tailings-ponds-leaking-alberta-oilsands/

Published by Sharon J. Riley, The Narwhal's Alberta-based investigative journalist. Her essays, interviews and long-form nonfiction have also been published by The Walrus,..

The Narwhal https://thenarwhal.ca

We note on June 26, 2017 in "Tar Sands Tailings: Alberta's Growing Toxic Legacy" at https://tinyurl.com/y9oub92q Anthony Swift witing in the Natural Resources Defense Council (NRDC) blog reported "Cleaning these toxic lakes will be an expensive undertaking. According to some industry estimates cleaning the tar sands tailings will cost as much as $44.5 billion and reclaiming the land will cost another $6.8 billion. To put this liability in context, these costs exceed the $41.3 billion royalties the province of Alberta has received from its tar sands operations since 1969. 

In addition, on November 1, 2018 in "Cleaning up Alberta’s oilpatch could cost $260 billion, internal documents warn:" at https://tinyurl.com/ybcp4ozt Mike De Souza of the National Observer, Carolyn Jarvis of Global News ,and Emma McIntosh and David Bruser of the Toronto Star  Special to Global News reported that Rob Wadsworth, vice-president of closure and liability for the Alberta Energy Regulator says a “flawed system” of industrial oversight is to blame for estimated liabilities being far higher than any liability amount made public by government and industry officials.  He called on all stakeholders to accept tougher regulations and move away from a system that now allows the largest companies to take centuries to clean up their toxic well site graveyards. Until 2018 the public had been told the liabilities have been calculated at about $58 billion, far less than Wadsworth’s estimate. The government, meanwhile, had only collected $1.6 billion in liability security from companies. The liabilities include costs that companies must assume to shut down aging and inactive oil and gas exploration wells, facilities and pipelines once they are no longer needed. Another significant part of the liability is the clean-up of toxic tailings ponds from oilsands extraction mines near Fort McMurrray. The ponds have sprawled to cover an area the size of Kelowna.  The tailing ponds are used by companies to dump the waste from the mining of bitumen. The process normally requires hot water to separate bitumen from the oily deposits of sand beneath the boreal forest in Alberta, leaving behind a yogurt-like sludge.

Utilities Exploit Market Loopholes, Costing Midwest Consumers $350 Million in 2018 - Study Finds Nearly One Fifth of Coal Generation the Midwest Operated Uneconomically

Regulated monopoly utilities overcharged millions of U.S. ratepayers in the Midwest at least $350 million in 2018 by selling them power from coal plants instead of from lower-cost, cleaner sources, according to a study released today by the Union of Concerned Scientists (UCS).

Consumers paid an average of $5 a month and as much as $184 a year in increased electricity costs that pay for monopoly utility practices that clog up the grid with dirty, expensive coal power and deprive less polluting resources grid access and revenues.

“Our analysis shows millions of customers are forced to subsidize utilities’ coal-fired power plants without even realizing it,” said Joe Daniel, senior energy analyst at UCS and co-author of the report “Used, But How Useful? How Electric Utilities Exploit Loopholes, Forcing Customers to Bail Out Uneconomic Coal-Fired Power Plants.” “Utilities have been hoodwinking regulators and ripping off their customers to prop up their uneconomic coal plants when lower-cost resources are readily available,” added Daniel.

Power markets are set up so that the lowest-cost resources should operate when they are available. But monopoly utilities, which build and operate power plants that directly serve retail customers, are able to exploit loopholes in the market rules at the expense of consumers. One example is “self-committing,” which allows the company to sell power from its own, uncompetitive coal plants at a loss instead of from cheaper, cleaner energy sources.

If the energy resources in the Midcontinent Independent System Operator (MISO) market were dispatched economically, consumers would have saved approximately $350 million dollars in annual electricity bill costs in 2018. Furthermore, the coal fleet across MISO would run 19 percent less and allow cheaper, cleaner generation access to the market. These consumer savings stem from a reduction in regulated utilities’ fuel and operations costs.

“Power from coal plants is expensive because the fuel isn’t cheap and the plants cost a lot to operate compared to other resources available in the market,” said Daniel. “But some utilities will sell power from coal plants at a loss, banking on being able to recoup those losses on the backs of captive customers.”

Utilities and regulators are supposed to check to make sure they are truly putting the least expensive power on the grid, but in MISO, they often don’t spot the problem. The report notes that public utility commissions, which regulate monopoly utilities and determine what costs they are allowed to recover from ratepayers, also are usually unaware that they are greenlighting a utility bailout.

“Allowing uneconomic self-commitment of coal-fired power plants in those markets diverts precious consumer dollars away from improving market efficiency and wastes dollars that could otherwise reduce greenhouse gas emissions,” said Jon Wellinghoff, former chair of the Federal Energy Regulatory Commission and CEO of GridPolicy, Inc. “If we are going to move rapidly to the low-carbon future necessary to avert climate disaster we need to be as efficient as possible in the operation of wholesale electric markets.”

Daniel and his co-authors analyzed the MISO market, which provides power to 15 states. The report explored a most efficient way to use existing energy resources in the area, using the same modeling tool that MISO operators and many utility companies use when making their own market forecasts.

According to the analysis, the following utilities sold the most coal-powered electricity when less expensive electricity was available from market sources in 2018:

Cleco Power LLC, which provides power to more than 240,000 families in Louisiana, uneconomically generated electricity from its Dolet Hills and Brame Energy Center coal plants, at a $123.3 million loss in 2018. If utilities in MISO ran their power plants more efficiently, the average family in Louisiana could have saved $15 a month in electricity bills, or a total of $184 that year.

DTE Electric Company, which also provides power to nearly 2 million families in Michigan, uneconomically generated power from its five coal plants—Belle River, Monroe, River Rouge, St. Clair and Trenton Channel—at a $94.7 million loss in 2018. If utilities in MISO ran their power plants more efficiently, the average family in Michigan could have saved $5 a month in electricity bills, or a total of $61 that year.

All Aircraft Could Fly on Sustainable Fuel by 2030, Says World Economic Forum Report

• Enough sustainable feedstock supplies, such as municipal waste, agricultural residues and cooking oil waste, exist to reach production levels of 500 million tons of Sustainable Aviation Fuel (SAF) annually, meeting the projected jet fuel demand of all aviation by 2030.
• Planned production capacity investments will, however, only yield 4 million tons annually by 2030 – approximately 1% of global jet fuel demand for 2030 – requiring the urgent stimulation of a viable SAF ecosystem to reach 2030 decarbonization targets.
• Hybrid-electric and hydrogen-powered aircraft could help the industry reach the next efficiency target, but development and deployment at scale could take 10 to 20 years.
• The Cleans Skies for Tomorrow (CST) initiative is working on a pilot project for the creation of a SAF sector in India and plans to replicate this process in other markets.

The Sustainable Aviation Fuels as a Pathway to Net-Zero Aviation Report shows that a transition to carbon-neutral flying is possible, with SAF the most promising decarbonization option in the near term.

There are enough sustainable, renewable feedstocks to fuel all aviation using SAF by 2030. Scaling up SAF production to meet the net-zero ambition, however, depends on several new technology routes and significant multistakeholder collaboration. The main challenge will be developing appropriate commercial, financing, incentives and regulatory mechanisms.

SAF as a feasible route to net-zero aviation

In 2019, aviation accounted for 3% of human-made carbon emissions. Hybrid-electric and hydrogen-powered aircraft could help the industry reach the next efficiency target, but development and deployment at scale could take 10 to 20 years and the technology will initially be limited to smaller, shorter-range aircraft.

Furthermore, in 2019, fewer than 200,000 metric tons of SAF were produced globally, a tiny fraction of the roughly 300 million tons of jet fuel used by commercial airlines.

More positively, SAF has already fuelled more than one-quarter of a million commercial flights and is compatible with existing aircraft and fuelling infrastructure.

Even following the challenge to aviation during the COVID-19 pandemic, members of the CST coalition are continuing their commitment to drive energy transition in aviation towards the goal of net-zero aviation.

An economic opportunity for developing markets

Aviation delivers significant benefits globally, not least to developing markets, from where a sizeable portion of global aviation demand is expected to come. The current crisis may also present an opportunity for countries with low renewable power prices and ready access to feedstock. If these countries act now, they can benefit from energy transition in aviation and become global SAF production hubs.

“The structural changes happening in the industry are an opportunity to rebuild and transition towards a low-carbon future and meet the sustainability demands of its consumers,” said Christoph Wolff, Head of Mobility Industries at the World Economic Forum.

To this end, the CST initiative is working on a pilot project to create a SAF sector in India and plans to replicate this process in other markets that have the necessary conditions to foster a valuable SAF industry.

Building scale is key to improving cost

This report, written in collaboration with McKinsey & Company, shows that despite feedstock availability and even if all currently announced SAF projects are completed, capacity will only increase to approximately 4 million tons annually, which equates to approximately 1% of global jet fuel demand in 2030.

Currently, SAF is more than double the cost of conventional fuel. As further innovations and efficiencies of scale in production are achieved, prices will drop.

“We see the classic Catch-22 problem as in other energy transition discussions. Insufficient scale drives per unit costs high and high costs keep demand low. Some structural solutions could break this impasse – B2B contracts, prioritized aviation and airport fee structures etc. that will give fuel producers the required support to invest in production capacity,” said Daniel Riefer, Associate Partner, McKinsey & Company.

Investments can accelerate promising new technologies

Fuels produced from used cooking oil and other lipids will contribute most to developing capacity in the short term. New technologies take time to mature and develop, but investment decisions, including building larger demonstration plants, are needed now.

Power-to-liquid fuels can contribute the most to SAF capacity, but will only prove effective after 2030 under current development plans. Fuels made from CO2 and green electricity will require financial support for their technology to mature and will need access to renewable electricity.

There is no silver bullet for net-zero aviation. No single feedstock will be practical in every geography or yield enough SAF to meet all demand. Even as costs fall, SAF will have higher production costs than fossil fuels, though a rising carbon price may enable parity in the 2030s.

While the report demonstrates that enough feedstocks are available globally to make SAF economically viable and scalable, several factors are required. These include supportive regulatory frameworks, measures to stimulate demand from corporate and private customers, and innovative ways to finance the transition. The CST coalition is debating how to meet these challenges and help aviation earn its right to keep growing.

...

Carbon offsets ... may be beneficial and airlines are on board with market-based measures such as CORSIA, which may advance global reforestation. Reforestation offsetting schemes can cost as little as $5 per metric ton of CO2  captured, but increasing demand could lead to significant cost increases over time and there remain significant risks and questions over their long-term effectiveness. Other offsetting projects include resource recovery, such as capturing methane from landfills. Geological sequestration may be the most effective option currently available, but it is expensive and is still a nascent technology. 

...

HEFA (Hydroprocessed Esters and Fatty Acid synthetic paraffinic kerosenes - SAFs) will likely remain the most efficient pathway through 2030. It is the most cost competitive since the proven technology requires relatively little capital investment – the main barrier is the cost of feedstock, a commodity with no big cost-reduction potential. Production costs depend mostly on the cost of feedstock, which today ranges from about $600 to $950 per metric ton. Including the cost of used cooking oil, solar-based hydrogen and operating and capital expenses, which should all decline in the years ahead, total production costs per metric ton of SAF could decrease from around $1,400 today to around $1,100 by 2050 in constant dollars, compared to a steady cost of fossil jet fuel of about $620. Due to falling production costs and availability of sustainable feedstock, by 2030, HEFA produced anywhere in the world could cover 100% of European jet fuel demand at less than 1,500 USD/t.