Some people take a college course in climate change policy. I read a new book that outlines which energy policies can put us on the path to a low-carbon future. Designing Climate Solutions: A Policy Guide for Low-Carbon Energy combines the latest research and analysis on low-carbon energy solutions from electric vehicles to renewable energy. It is a primer that identifies which specific policies, applied to the top 20 most-emitting countries, can have the largest potential impact to reduce emissions. The book, with clear and jargon-free explanations of policy changes and fiscal implications, outlines long-term goals, price-finding mechanisms, and small sets of actions that can achieve market goals. It is a must-read.
Designing Climate Solutions (November, 2018) offers policy design principles to ensure that future climate and energy policy maximizes greenhouse gas (GHG) reductions and economic efficiency. The book (and accompanying website) is intended as a resource by policymakers, advocates, philanthropists, and others in the climate and energy community as a guide to where to focus efforts and how to ensure that policy is designed to maximize success. Part I of the book provides readers with a roadmap for understanding which countries, sectors, and sources produce the greatest amount of GHG emissions. Part II of the book explores each of the emission-reducing policies, including detailed information on the policy and its goals, when to apply each policy, the key policy design principles that make that policy effective, and case studies of good and bad applications of that policy.
The Necessity of Reaching the 2 Degree Celsius Limit
The scope, scale, and irreversibility of climate change — and the irreducible mathematics of carbon accumulation — together mean that swift action to abate greenhouse gas emission is imperative. There are 3 consequences of global temperature shifts:
- Increase in the frequency of extreme temperature and weather events, which makes previously rare extreme temperatures more frequent
- Irreversibility of warming on reasonable timescales, which, once a quantity of greenhouse gas is emitted, will begin cycling out of the system as various natural cycles pull it out of the atmosphere
- Danger of triggering natural feedback loops that cause additional warming, as, although anthropogenic (human-caused) emissions may be the initial catalyst in warming the globe, Earth’s natural systems can exacerbate this impact, understood as a vicious cycle
The authors of Designing Climate Solutions, Hal Harvey with Robbie Orvis and Jeffrey Rissman, argue that we must act as soon as possible to reduce emissions. First, most energy-consuming assets — buildings, power plants industrial facilities — have a turnover rate of decades or more, so that we lock in a higher level of warming with each piece of new equipment we adopt or install. Second, because warming is a function of the total amount of carbon dioxide in the atmosphere, delayed action on emission reductions makes it far harder to achieve the same concentration of CO2 in the future.
Reasons for Hope in Designing Climate Solutions
But the authors do not perseverate on notes of doom and gloom. Instead, they say that there is ample technology to put the world on a low-carbon trajectory. Costs for wind and solar power have plunged, propelling their growth around the world. Innovation in energy efficiency continues, with well-constructed buildings using a fraction of the energy of older buildings thanks to advances in lights, windows, insulation, and heating and cooling systems. Decades of energy policy examples have highlighted which policies are most effective in reducing carbon emissions and energy use. From city ordinances to international treaties, politicians are “lining up” to put strong policies into action — at the international level, 189 countries have submitted emissions targets, and such commitments over nearly 99% of the world’s emissions. Consumers, too, are shifting their behavior to reduce their carbon footprint, with households installing solar panels or opting into green power programs, buying energy efficient appliances, and driving EVs.
The authors acknowledge that, while development in low-emission technologies is providing an array of options for emission abatement, policymakers need to help push these technologies into the marketplace with smart policies that quantify each major source of GHG emissions.
Step #1 — Identifying the Sources of GHG Emissions around the World: Nearly 75% of global GHG emissions are generated by just 20 countries. Emissions from energy combustion and industrial processes (including agriculture and waste) are the primary sources of GHG emissions, comprising more than 93%.
Step #2 — A Straightforward Roadmap for Reducing Energy-Related Emissions: We need to implement policies that reduce emissions in the electricity, industry, transportation, and building sectors in the top 20 emitting countries. To do so, a suite of policies which fall into 4 broad types is the lowest-cost way to drive down GHG emissions.
4 Policy Types to Support Designing Climate Solutions
Performance Standards improve new equipment and help capture savings that economic signals cannot, because of market barriers. These quantitative targets at the device, fuel, or sector level specify levels of performance businesses or equipment must achieve — for example, fuel economy standards for vehicles or particulate emissions standards for coal-powered plants. They increase the availability of price-competitive efficient and low-carbon technologies and spur the innovation essential to long-term decarbonization. Performance standards also serve as market guidelines that encourage competition to produce least-cost solutions and are particularly necessary when price is not an effective inducement.
Economic Signals can be highly efficient and encourage the uptake of more efficient equipment driven by performance standards. Two of the most common economic signals governments use to promote decarbonization are economic incentives for clean energy, and taxes on carbon. Generally, economic incentives should decrease over time while carbon taxes should increase over time. When possible, the endpoint or goal of an economic incentive should be selected and explicitly specified. If a long-term goal is publicly specified, this helps businesses understand policymakers’ intentions and make plans with the benefit of having this endpoint in mind. Economic incentives for clean energy should be based on the amount of clean energy that is generated and used, not on the amount of capacity built, or money invested to purchase or install clean energy infrastructure. This ensures that the incentive is only paid when these resources are used — and actually playing an active role in decarbonization. Economic signals are best put into place as far upstream as possible, where sophisticated upstream actors will adjust to the signals, resulting in accelerated decarbonization. This improves the ease of regulation (it is much easier to regulate 500 companies than 1 million consumers) while making sure the incentive is carried through to the whole value chain.
Support for Research and Development (R&D) brings to light new technologies that can accelerate and complete global decarbonization. Continued and broadened support for R&D is an essential component of remaining below the two-degree warming target and can lower the cost of future emission abatement by decreasing the costs of low-carbon technologies. To help guide funding priorities, the government should involve the private sector, which can bring crucial expertise regarding the technologies, markets, scalability, and technical challenges associated with early-stage technologies. Bringing this experience to bear on funding decisions can help ensure that government R&D dollars are spent wisely. An efficient way for the government to fund and support R&D is to concentrate funding on a specific topic in more focused, granular institutions, possibly co-located with one another. This allows researchers working on similar technologies to share information and work together while avoiding the inefficiencies that can arise from spreading funding for similar research across many different institutions. Ideally, companies and government-owned research facilities will have a large pool of researchers to draw on with strong backgrounds in science, technology, engineering, and mathematics (STEM). To attract this talent, policymakers can establish top-quality education programs and ensure immigration laws allow companies to hire STEM talent from other countries.
Enabling Policies tend to lower transaction costs, improve information, and streamline decision making. Supportive of and secondary to the 3 previous types of policies, these lower the costs of performance standards and economic signals by pushing new technologies to market and lowering the costs of existing technologies by removing deployment market barriers.
A Suite of Policies is Essential for Designing Climate Change Solutions
Policymakers have many types of policies at their disposal to limit global warming to the 2-degree Celsius target. Policies with large potential abatement and long lead times that deliver economic savings should be prioritized first. Initial policy action must be followed with sector-specific performance standards, carbon pricing, and R&D-supporting policies to help lower abatement costs and provide additional compliance options. Other considerations like political feasibility must also be considered.
Part I of Designing Climate Solutions offers the suite of policies available and helps with strategies for identifying the most effective options and principles for designing successful policy programs.
- Chapter One: Putting Us on Track to a Low-Carbon Future — This chapter discusses how much effort is needed, the types of reductions and emissions pathways that are need in order to avoid the worst parts of climate change, and ideas about where to focus.
- Chapter Two: Energy Policy Design — 4 types of essential energy policy and how they reinforce and interact with one another comprise the essence of this chapter.
- Chapter Three: How to Prioritize Policies for Emission Reduction — Which policies can effectively work together in a portfolio to drive down GHG emissions? This chapter lays out a framework for identifying these policies and provides insight into how to prioritize policies for reducing emissions.
Part II explores these policies in depth. Each chapter includes information on how each policy works, when to use the policy, the policy design principles most applicable and how they can be implemented, and case studies of good and bad implementation of the policy.
- Chapter Four: Renewable Portfolio Standards and Feed-In Tariffs — These topics are considered because their roles in promoting renewable energy are similar: each policy creates a compensation mechanism for renewable energy generation and drives renewable energy growth. However, a feed-in tariff is price-based, while a renewable portfolio standard is target-based.
- Chapter Five: Complementary Power Sector Policies — This chapter outlines that, even under the best possible policy design for renewable portfolio standards or feed-in tariffs, a more holistic approach is needed to ensure the transition is affordable, increases prosperity, maintains reliability, and expands service to unserved customers.
- Chapter Six: Vehicle Performance Standards — Designed well, stronger vehicle performance standards can achieve about 3% of cumulative global emissions needed to meet the 2-degree Celsius target.
- Chapter Seven: Vehicle and Fuel Fees and Feebates — Along with performance standards, fees of fuel and inefficient new vehicles are among the best policies for reducing emissions from on-road vehicles, which make up 71% of emissions from the global transportation sector.
- Chapter Eight: Electric Vehicle Policies — Vehicle electrification policies can contribute at least 1% of cumulative emission reductions to meet a 2-degree target through 2050.
- Chapter Nine: Urban Mobility Policies — Smart policies to enable alternative forms of urban mobility and reduce the number of vehicles on the roads can improve the quality of life with dramatically cutting transportation sector emissions.
- Chapter Ten: Building Codes and Appliance Standards — Residential and commercial buildings are major energy consumers, accounting for roughly 20% of delivered energy use and more than 50% of electricity worldwide.
- Chapter Eleven: Industrial Energy Efficiency — Industry plays a central role in the world’s economy and is responsible for more than 40% of world energy consumption, more than any other sector. Industrial energy efficiency policies can achieve at least 16% of the GHG reductions needed to hit the 2-degree target.
- Chapter Twelve: Industrial Process Emission Policies — Industrial process emissions reflect all the non-energy ways in which industrial production results in the release of GHG into the atmosphere. Part of the challenge in reducing process emissions is the diversity of ways in which the emissions are generation. Measures to reduce process emissions often must be specific to each type of process.
- Chapter Thirteen: Carbon Pricing — Carbon pricing is a critical tool for reducing emissions and should cover all sectors of the economy. The impact of carbon pricing depends on its design and on the price. The authors’ modeling of a carbon price set at the social cost of carbon suggest it can deliver at least 26% of the emission reductions necessary to meet the 2-degree Celsius target.
- Chapter Fourteen: Research and Development Policies — This chapter describes a handful of best practices that can help energy technologies advance all the way from the laboratory to the marketplace. This work is built on experience in the field, collaboration with government, reviews of a dozen studies, and many interviews with experts from the private sector, academia, and national labs.
- Chapter Fifteen: Policies for a Post 2050 World — This chapter considers technologies that may be necessary in the long term (after 2050) to achieve the emission reductions required by a future with less than 2 degrees of warming and policies and adapt to climate change. Policies to accelerate technologies that may not currently be ready for widespread deployment must begin now, the authors say, so that they will be sufficiently mature by the time they are needed.
Designing Climate Solutions: A Policy Guide for Low-Carbon Energy is an accessible guide that should be on every person’s resource shelf. It offers concise information and pathways for the necessary transition to a low-carbon society. Because the book moves fluidly within argumentation, data, and practical applications, it allows multiple audiences to consider policies that can introduce climate change action in all our communities. The authors’ focus on quantitative analysis, at first glance, seems reductive to a strict economic lens. But the various case studies through the book bring the policy recommendations back to the human — which becomes a descriptive method that continues to examine and also make relevant analogies to familiar cityscapes and scenarios.