Nuts and Bolts Carbon Policy: First Steps Under a Green New Deal

Alexander Hamilton, the founder of the American economic system, laid the foundation for government investment in new and important economic enterprise. He wrote:

Experience teaches, that men are often so much governed by what they are accustomed to see and practice, that the simplest and most obvious improvements, in the [most] ordinary occupations, are adopted with hesitation, reluctance and by slow gradations … To produce the desirable changes, as early as may be expedient, may therefore require the incitement and patronage of government…

He goes on to say:

The apprehension of failing in new attempts is perhaps a more serious impediment…it is of importance that the confidence of cautious sagacious capitalists…should be excited… it is essential, that they should be made to see in any project, which is new, and for that reason alone, if, for no other, precarious, the prospect of such a degree of countenance and support from government, as may be capable of overcoming the obstacles, inseparable from first experiments.

Combine the above directive from Hamilton with the fact that the climate crisis is slowly but inexorably destroying coastland, agricultural systems, and formerly habitable parts of the planet. In human terms, this is our “oh, shit” moment. Either wake up and turn the Titanic now, or continue business as usual and doom our children.

Many people have been showing us both the problem and the solutions. James Hansen and Al Gore, of course. But also Bill McKibben, who in 2012 showed us the terrifying math, and then created a movement to demand we keep the fossil fuel in the ground. And Van Jones, whose Green Jobs Corps showed us ten years ago that the changes could create opportunity for the youngest and most disadvantaged among us.

More recently the “Water Keepers” of the Lakota Sioux fought the Dakota Access Pipeline that would multiply the civilization-destroying power of the Alberta Tar Sands oil boom. And now we have the kids of the Sunrise Movement, who camped outside Nancy Pelosi’s office this past November, clamoring for a Green New Deal to help them save their futures. And now-Rep. Alexandria Ocasio-Cortez, who joined them and then laid out a Green New Deal work plan and principles for lawmakers.

So here we are. I am going to assume from here that if you are reading this, you understand the urgency of the climate crisis. (If you aren’t sufficiently terrified, perhaps you missed the hurricanes and wildfires of 2018? At least please go read Bill McKibben’s link above.)

So far the public discussion about a Green New Deal has mostly been about broad principles, which is appropriate. But as we start to talk about the legislation and the big public investments that are needed, let’s also understand which policies will force change and which will not.

So what I will do from here is:

  1. Briefly lay out the overall principles and components of the Green New Deal from various proposals.
  2. Discuss the different types of policies that would work to green the most carbon-intensive sectors of the economy, and
  3. Make some distinctions between what the federal government can do directly, and what the federal government can help fund.

My hope is to inform the conversation about how to implement the transition to a cleaner economy in ways that reflect the Green New Deal principles, but in this piece I am only addressing a narrow slice of that pie. Since it’s best to write what you know, I’m going to talk mostly about specific policies that would provide a first step toward decarbonizing the big economic sectors I know best, such as industry and energy. (I know agriculture is critical, but someone else can fill in those details; likewise I will just make some broad points about the federal role in transportation policy). So here we go.

Green New Deal Principles and Components

Way back in his 1992 magnum opus, Earth in the Balance, Al Gore actually proposed a “Global Marshall Plan” to green the planet (because of course he did). His ideas included research and development into cleaner technologies which then could be widely shared, and also revising the tax code to penalize fossil fuels. But even though the UN opened its first international climate treaty for signature that year, the math wasn’t yet terrifying enough for us, and widespread clean energy was still pie in the sky.

More recently the idea for a Green New Deal seems to have sprung up around 2008 after the financial crash, when both a group of British analysts and the United Nations Environment Programme (UNEP) each put out reports pushing for greening the world economy. UNEP proposed six points: clean energy and cleaner technologies including recycling, sustainable agriculture, maintaining ecosystem infrastructure, reduced emissions from deforestation and degradation, and sustainable cities including planning, transport, and buildings. The British analysts made similar points and also included a restructuring and reform of the financial system along the lines of the original New Deal, plus massive investment in clean energy and energy efficiency.

Fast forward ten years, and more proposals are now floating around. The Green Party put out a proposal that uses the Jacobson Plan for converting to 100% renewable energy as a base. The Jacobson Plan shows how 100% renewable energy might work in the US. (It does not address policy design for achieving it, which is what I will discuss below.) The Green Party also suggests several avenues for public investment into locally-based renewable electric generation and other sustainability projects, and a full employment program guaranteeing jobs in clean energy and energy efficiency, and in sustainable transportation and agriculture.

On February 7, 2019, Representative Alexandria Ocasio-Cortez and Senator Ed Markey released a resolution outlining components of a Green New Deal.

Itcontains 5 overarching goals:

  • Net-zero greenhouse gas emissions through a fair and just transition for all communities and workers
  • Create millions of high-wage jobs and ensure prosperity and economic security for all
  • Invest in infrastructure and industry to sustainably meet the challenges of the 21st century
  • Clean air and water, climate and community resiliency, healthy food, access to nature, and a sustainable environment for all
  • Promote justice and equity by stopping current, preventing future, and repairing historic oppression of frontline and vulnerable communities.

It also contains 14 infrastructure and industrial projects, and 15 social and economic justice and security requirements. Go read the whole thing.

Nuts and Bolts Policy– How Do We Begin?

Now that we understand our goal (you clicked the link and read the resolution, right?) how do we get to a clean, renewable energy future that arrests climate change by not relying on fossil fuel, and which creates well-paid jobs and a shared prosperity that lifts all boats?

In this discussion I am going to focus solely on carbon policy affecting industry and energy, as I said above, because those are the components I know best. Others can detail the other components of the resolutions. Also please note that these should be seen as first steps on the way to a carbon free future.

To do that I will in particular reference two recent reports that I really like, because they lay out some of the policies that will work. The first, put out by Data for Progress, contains helpful summary lists of goals, and then the policies and public investments that should get us to those goals. The second, a more technical study called Designing Climate Solutions, shows the different economic sectors responsible for the highest percentage contributions to climate change, and constructs a model for policy makers in different geographic locations to test combinations of the most effective policy solutions for reducing and eliminating emissions of greenhouse gasses (largely carbon dioxide and methane). (It is explained more here.)

Data for Progress establishes six broad goals, with specific policy solutions listed under them: Transform to a low-carbon economy, Fulfill the right to clean air and clean water, Restore the American landscape, Strengthen urban sustainability and resilience, Put a generation to work, and Ensure a just transition.

Designing Climate Solutions focuses specifically on the first goal – transforming to a low-carbon economy – and provides a simulator to help governments figure out the most effective specific mix of policies for their regions. The authors also point out that a relatively small set of policies, targeted at specific economic sectors, are likely to be most effective.

Here’s their illustration of where we mostly need to focus in order to decarbonize:

The study notes that most climate models indicate that we must reduce global carbon emissions 25% to 55% from 2010 levels by 2050 to keep warming to less than 2 degrees Celsius. The accumulation of policies as illustrated in the graphic represents about a 53 percent reduction in emissions from 2020 levels by 2050.

I’m not going to run through every single suggested policy (go read the report!), but I will touch on some highlights. Many of the policies they point to also fall into two categories similarly delineated by Data for Progress: (1) technical policies or standards and (2) public investments. Other policies fall into a third category, which I’ll call (3) financial incentives and removal of financial and regulatory barriers.

1. Technical Policies – a few illustrations

There are some sectors of the economy for which there are straightforward technical solutions to decarbonizing – or at least dramatically reducing carbon emissions. For these sectors, technical emissions limits or energy efficiency requirements that get more stringent over time have been shown, over and over, to work really well. We just need to get a lot more serious about imposing them.

Some of these technical policies should be no-brainers; how about a stringent national renewable portfolio standard (RPS)? An RPS, which many states already have, establishes a requirement for every utility to get a specific percentage of its power from renewable energy by a date certain. A Green New Deal should contain a super tough RPS which gets tighter automatically over time. We already know this works.

[Side note that matters: don’t let anyone try to convince you that a carbon tax, or carbon fee and dividend, can substitute for simple technical standards in the economic sectors that lend themselves to simple technical standards. It’s a crock of BS they’re trying to sell you in order to weasel out of changing their business plans. They will find loopholes. They always do.]

Ok, back to my main point. Here’s an area that is not focused on as much. You can see from the illustration that we not only need to decarbonize the electric power sector, but just as importantly, we need to decarbonize the industrial sector, which is, arguably, more difficult. Heavy industry uses, conservatively speaking, a shit ton of fossil fuel! And public discourse tends to ignore it. How do we tackle it?

Well, funny you should ask. Here’s an example. It is estimated that US industry wastes between 20 and 50 percent of the energy it generates. If US industry could be persuaded to recycle their waste heat by widely using combined heat and power (CHP) systems, or employ other energy management systems, they would save both money and energy.

Why don’t they already do that? Well, there can be institutional barriers to this. For example, manufacturing companies may be loath to make big capital investments in an area (energy) that is not their core business, and which may not be their area of expertise. Also there may be bureaucratic hurdles.

However there are effective policy solutions, and we can make them happen. Both Japan and China have established mandatory energy efficiency targets for various industries, with specific measures attached. And of course, any energy efficiency standards we establish should get tighter automatically over time. We can also require industry to employ energy management systems, for which the most well-known international standard, ISO 50001, includes an “energy planning process establishing baseline energy use, identifying energy performance indicators, setting objectives or targets, forming action plans, and conducting periodic measurement and internal audits.”

[Another side note: ok, so none of this stuff is sexy, and it’s not the radical restructuring of the economy that we really need, and maybe it’s boring. But it’s really, really crucial! We ignore it at our peril.]

Here’s another example where simple technical standards really matter — energy efficiency standards for all kinds of widely used stuff. One of my personal heroes that you’ve probably never heard is Art Rosenfeld. Who is Art Rosenfeld? Well, he was a physicist who started studying energy efficiency at Lawrence Berkeley National Lab back in the 1970s, and was later the California Energy Commissioner, and he’s the guy largely responsible for the fact that your refrigerator uses far less energy than the one in your parents’ house when you were growing up (not to mention the dinosaur in your grandparents’ house). He established energy efficiency standards for appliances like refrigerators decades before anyone else was thinking about it. For quite a while, California standards drove the market.

Eventually the federal government also jumped into the mix. Check out the graph below, which illustrates refrigerator energy use over time:

So between California energy efficiency standards, federal standards for a wide variety of appliances, and the federal Energy Star program, energy efficiency of a wide range of stuff has improved enormously over time, and there’s no reason that can’t continue. We just need standards that keep getting tighter automatically over time.

Here’s another no-brainer example of a simple technical standard that works – fuel economy standards for vehicles. I don’t really have to explain this, do I? We just need to get much more stringent about this, and require continuous improvement over time. The auto industry knows what to do. They just need to be told to do it!

Another example of simple technical standards is building codes. Building codes generally set base level performance levels for components of building such as windows and insulation. We need to require new and modified buildings to meet ever more stringent energy efficiency standards.

An entire category of massive carbon emissions is industrial process emissions, and some of those processes are good candidates for technical standards. Here are the highest emitting industrial processes worldwide:

So for example, we can require that methane be captured from landfill gas, and that biogas be captured from wastewater treatment. And over the next 10 years while we’re transitioning to 100% renewable energy, we still have to contend with natural gas and petroleum extraction systems that leak ridiculous amounts of methane all the time. We need to at least make sure they are required to plug all the leaks (“green well completions”). (Of course the EPA was trying to require that until He Who Shall Not Be Named killed the rules…)

2. Public Investments – a few illustrations

The astute reader will note that I haven’t talk about Green New Deal principles like good paying jobs yet. You’re right! I just wanted toget the simple, low-hanging big carbon emissions fruit out of the way first.

So let’s now talk about public investment.

Renewable Energy Investments

What have recently been the top two fastest growing job categories in the US? For 2016, the latest year for which the Bureau of Labor Statistics has published data, number one is “solar photovoltaic installers” and number two is “wind turbine service technicians”. Imagine what a national renewable portfolio standard will do, especially in those states where renewable energy development has so far been lagging (I’m looking at you, Sunshine State!).

Then imagine if, instead of subsidizing oil and gas development, and instead of pushing offshore oil development, the federal government directed significant investment toward developing offshore wind. We have the potential, with our offshore wind resources, to power much of the coastal US where three quarters of the US population lives:

Technical resource potential was found to be…7,203TWh/year of net energy production for the United States. This technical energy potential of 7,203 TWh/year is approximately twice the electricity used in the United States in 2014. (p.39)

My home state of North Carolina has among the best offshore wind resources in the lower 48. So what are we waiting for?

We also are going to need to invest in training all of those solar and wind energy technicians, especially in those areas where development has been lagging up until now.

Finally we need to invest in grid upgrades that will allow for efficient dispatch of increasing amounts of distributed energy.

Energy Efficiency Investments

The Data for Progress report sets a goal of 100% net-zero building efficiency standards by 2030, and lists some investments to help get us there, including workforce developmentand training, community residential and commercial weatherization programs, and net-zero construction and high-performance retrofits for public buildings, universities, schools, and hospitals.

Note that building codes generally apply to new and modified buildings. What about the already existing buildings? AOC’s proposal, cited above, goes even further and says we should invest in “upgrading every residential and industrial building for state-of-the-art energy efficiency, comfort and safety”.

And why not? We had a Works Progress Administration (WPA) as part of the original New Deal. It worked the first time. Why not a new WPA to put people to work weatherizing existing buildings all over America, especially in neglected communities? Pay people a living wage, revitalize their neighborhoods, save massive amounts of energy and carbon emissions and reduce their utility bills, all while jumpstarting local economies. Trickle down didn’t work, but Keynesian economics usually does.

Transportation Systems Investments

Fund public transit, fund public transit, fund public transit. I cannot stress this enough. Every city in America should have a functional multi-modal transit system with electric buses and either bus rapid transit or light rail. They cannot fully fund this without significant federal help. Also did you know the federal government developed a high-speed rail program for the nation as part of the stimulus package in 2009? There was a map and everything! Here it is:

Just food for thought, all. (For lots more on rail possibilities, see Solutionary Rail, and also Bruce McFarlane’s Steel Interstate series).

While we are on the subject of transportation, what about trucks? One thing we can do is fund research and development on electric trucks, while at the same time requiring improved fuel efficiency for existing long-haul trucks.

One other quick fix we can fund is truck stop electrification. When long-haul truckers stop for the night, they often keep generators running to provide climate control for the cargo in their cabs. Electrifying more truck stops nationwide would stop this fuel waste that fills the air with carbon.

3.  Financial Incentives and Removal of Financial and Regulatory Barriers – a few illustrations

Financial and regulatory incentives for utilities need to align with increasing amounts of distributed renewable energy, and against siting of new large fossil fuel infrastructure.

Where I live in North Carolina, our monopoly utility, DukeEnergy, makes the most money when it builds new baseload fossil fuel (natural gas) power plants. That’s because they not only get to pass through actual construction costs to ratepayers – us – but they also make a profit of some 10% on new capital assets, all courtesy of rate hikes approved by the NC Utilities Commission.

In other words, Duke Energy makes more money when they can build more plants and sell more electricity, so their financial incentive is the opposite of energy efficiency. This is not true everywhere. In other parts of the country, regulated utility profits have been “decoupled” from increased electricity sales, and electricity rates are tied to other performance measures.

It gets complicated, but the bottom line is that state utility commissions have a lot of power (see what I did there?) to influence the incentives by which utilities operate. Since they approve utility resource plans, they can also back off allowing utilities to keep obsolete generation like old fossil fuel plants. We need to make them exercise that power differently.

Another example is the establishment of green banks. New York State is talking about establishing one now. A federal or state green bank could provide low-cost financing for capital expenditures across a wide range of customers: it could help farmers buy anaerobic digestors to capture animal waste gas, help homeowners and businesses finance solar energy which will save them money in the long run, and help municipalities fund EV fleets, transit, local microgrids, and street level improvements to enhance walkability and bike access. And on and on.

It is also imperative that we phase out national level subsidies for the fossil fuel industry, which are substantial. In the US, the fossil fuel industry benefits from a variety of subsidies totaling many billions of dollars. For example, subsidies for fossil fuel exploration and production alone total over 20 billion dollars per year. These subsidies come in the form of tax breaks, rock bottom rents for exploration and extraction on federal land, and support for technology research and development.

Finally, let’s talk briefly about carbon pricing. Going back to the first graphic in this piece, note that carbon pricing (tax, fee and dividend, whatever) is listed as a useful policy, and it can be. But only in very specific circumstances. Not as a substitute for all the other measures I talk about here, where it would be relatively ineffective (which is why the corporate greenwashers like it). For example, the northeast states have a program called the Regional Greenhouse Gas Initiative (RGGI) which has put a price on utility carbon emissions, and used that money to finance a variety of state level energy efficiency programs, as well as community renewable energy and direct bill assistance. Note that the program has lots of benefits, but has saved a relatively small amount of carbon emissions.

California has a trading program it shares with Ontario and Quebec, which covers a larger number of carbon-emitting facilities than just power plants, but functions mainly as a backstop to other policies. A targeted federal program could do more than either RGGI or California-Ontario-Quebec, but only if its carbon price were set somewhat higher than has been typical.

That’s All, Folks

Phew! We have reached the end of this little summary for now. There is so much more to be said, and so much more to be done. But I hope I have provided a little bit of light.

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