The savings from cutting California’s carbon “outweigh the costs”

In 2006 the California legislature passed AB32, which required greenhouse pollution to return to 1990 levels by 2020. They left it up to state regulatory agencies to come up with the details.

Governor Schwarzenegger followed with an executive order that requires an 80% reduction from 1990 levels in greenhouse pollution by 2050 (at which time California’s is expected to be twice the 1990 population, so this represents a factor of ten per capita reduction in greenhouse pollution.)

The California Air Resources Board (CARB) has been working to meet various statutory deadlines for the reduction plan. Its proposed plan will be released next month (October). As part of the process, it has made estimates of the economic costs and benefits of its plans, and it released those estimates last week:

These estimates indicated that the overall savings from improved efficiency and developing alternatives to petroleum will, on the whole, outweigh the costs. This balance is largely driven by current high energy costs and the degree to which measures increase energy efficiency throughout the economy and move California toward ultimately cheaper alternatives to fossil fuels.

The measures pay for themselves — not even counting the benefit of helping to avoid catastrophic climate impacts. The executive summary lists the key elements of CARB’s preliminary recommendation for the 2020 target:

  • Expansion and strengthening of existing energy efficiency programs and building and appliance standards;
  • Expansion of the Renewables Portfolio Standard to 33 percent;
  • Development of a California cap-and-trade program that links with other WCI Partner programs to create a regional market system;
  • Implementation of existing State laws and policies, including California’s clean car standards, goods movement measures, and the Low Carbon Fuel Standard;
  • Targeted fees to fund the State’s long-term commitment to AB 32 administration.

There were two economic estimates prepared, one using CARB’s Environmental Dynamic Revenue Assessment Model (E-DRAM), and another done by U.C. Berkeley: Berkeley Energy and Resources (BEAR) model. The results were broadly similar. Both started with a Business As Usual (BAU) forecast, and then analyzed how that forecast would change in response to individual recommendations.

To calculate the economic benefits, the models need projections of future energy prices. They relied on a September 2007 report from the California Energy Commission, which, for example, forecast $3.67 for a gallon of gasoline in 2020. Keep in mind that if 2020 energy should cost more — which it surely will — the savings will be greater.

In the BEAR model, Real Output, Gross State Product, and Employment all rose under the proposed changes, compared to BAU. Carbon Emissions fell significantly, while Personal Income fell 0.2%. The E-DRAM results were similar, except that Personal Income rose by 2.8% in that model.

From CARB’s E-DRAM, here is Table I-2 from Appendix I, giving the costs and savings for individual recommendations (MMTCO2E is Million Metric Tons of CO2 Equivalent):

MeasuresMMTCO2E in 2020Costs ($Millions)Savings ($Millions)Net per MMTCO2E ($)TransportationLight-Duty Vehicle GHG Standards I27.71,37211,371–361Light-Duty Vehicle GHG Stardards II4.05941642–262Low Carbon Fuel Standard16.511,00011,0000Low Friction Oil2.85201,149–225Tire Pressure Program0.8295337–295Tire Tread Program0.30.6123–439Other Efficiency (Cool Paints)0.20(1)0(1)0(1)Goods Movement Efficiency3.50(1)0(1)0(1)Heavy-Duty Vehicle GHG Emisison Reduction (Aerodnamic Efficiency)1.41,136(2)496(2)(2)Medium and Heavy-duty Vehicle Hybridization0.593177–168Heavy-Duty Engine Efficiency0.626213–312Local Government Actions and Targets2200821–321High Speed Rail10(1)0(1)0(1)Subtotal62.2 Building and Appliance Energy Efficiency and ConservationElectricity Reduction Program15.23,2944,904–106Increased Combined Heat and Power6.83621,673–193Natural Gas Reduction Programs4.29101,355–106Subtotal26.3 Renewable Energy33% Renewable Portfolio Standard21.23,6711,88984California Solar Programs (3000 MW Installation)2.10(1)0(1)0(1)Solar Water Heaters (AB 1470 goal)0.10(1)0(1)0(1)Subtotal23.4 High GWP MeasuresReduction of Refrigerant from Non-Professional Servicing0.5600120SF6 Limits in Non-Utility and Non-Semiconductor Applications0. GWP Reduction in Semiconductor Manufacturing0.152.6017Limit High GWP Use in Consumer Products0.250.060.23–0.7Specifications for Commercial and Industrial Refrigeration41.240.660.15Foam Recovery and Destruction Proogram194.83095SF6 Leak Reduction and Recycling in Electrical Applications0.10.30.4–1Alternative Suppressants in Fire Protection Systems0.11.960.218Gas Management for Stationary Sources6.31.023.6–0.41Residential Refrigeration Early Retirement Program0.218.924.79–29Subtotal16.2 OthersLandfill Methane Capture1.0101Methane Capture at Large Dairies(3)1.0000Sustainable Forest Target5.050010Water Use Efficiency(4)1.4 — Water Recycling(4)0.3 — Pumping and Treatment Efficiency(4)2.0 — Reuse Urban Runoff0.2 — Incease Renewable Energy Production0.9 — Subtotal6.0 — Recommended Measures Totals13423,83537,533 For the footnotes, please see Appendix I (pdf).Please note in the above table how many of the rows represent net savings.

— Earl Killian

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