Where There's A Will (For A Carbon Tax), There's A Way (Toward A Green Future)

December 1, 2014- How may we characterize the progress made thus far toward a low-carbon future?

A recent Economic Scene post by Eduardo Porter at the New York Times' website provides a good summary of where we are now and what must be done to make progress going forward.

The emerging picture, which includes estimates from the Energy Information Administration, makes clear that the real constraint lies not in our ability to develop the necessary technologies but in our political will to deploy them.

Here are the highlights of the NYTimes.com post, "A Carbon Tax Could Bolster Green Energy":

• Buoyed by federal subsidies, newly installed wind-powered electricity generation grew to 13 gigawatts, representing 40 percent of new capacity added to the nation's power grid. But after those subsidies ended in 2013, the first half of 2014 saw an increase of only .84 gigawatts in wind-power generation. Porter writes that wind power’s future suddenly appears much more uncertain, facing a Congress controlled by Republicans with little interest in renewable energy.

• "Wind is competitive in more and more markets," said Letha Tawney at the World Resources Institute, quoted in the post. "But any time there is uncertainty about the production tax credit, it all stops."

• In its latest Energy Technology Perspectives report, the International Energy Agency writes that worldwide investment in renewable power has been slowing falling to $211 billion in 2013, 22 percent less than in 2011.

• Porter sees both good news and bad in the halting progress toward reducing the greenhouse gas emissions behind global climate change. "The good news is that humanity is developing promising technologies that could put civilization on a low carbon path that might prevent climate disruption," he writes.

• The success of new technologies have allowed the Environmental Protection Agency to pass new rules aimed at achieving a 30 percent reduction in carbon dioxide emissions from American power plants by 2030, compared with 2005.

• Those new technologies have also allowed President Obama to promise that our nation would curb total greenhouse gas emissions by 26 to 28 percent from 2005 levels by 2025 without further action from Congress; which helped China to commit to start cutting emissions after 2030.

• The bad news as Porter and others see it is concern over whether nations will muster the political will and mobilize the needed investments to deploy these new technologies.

• Energy technologies have become decidedly more competitive. "The United States’ Energy Information Administration projects that the levelized cost of onshore wind energy coming on stream in 2019 — a measure that includes everything from capital costs to operational outlays — could be as little as $71 per megawatt-hour measured in 2012 dollars, even without subsidies," writes Porter. "This is $16 less than the lower cost projection four years ago for wind energy coming online in 2015."

• Prices for photovoltaic solar cells have tumbled more than 40 percent, a rate much faster than the cost projections of energy from coal or natural gas.

• Energy Information Administration projections for 2040 show prices for renewables falling even lower. By then, electricity from photovoltaic solar plants could be generated for as little as $86.50 per megawatt-hour, without subsidies. In some areas wind-based plants could produce it for as little as $63.40.

• Intermittent energy sources like the sun and wind are likely to involve load management technologies to align demand for power with the variable supply.

• Porter notes that nuclear energy is also becoming more competitive. "Without any subsidies, new-generation nuclear power coming on stream in 2040 could cost as little as $80 per megawatt-hour, all costs considered," he writes. "This is only marginally more expensive than electricity produced with coal or natural gas, even without the added cost of capturing the carbon dioxide."

• Porter points to other much more optimistic cost assessments beyond the Energy Information Administration's, and yet he writes, "But for all the optimism generated by cheaper renewable fuels, they do not, on their own, put the world on the low-carbon path necessary to keep climate change in check."

• Porter says progress is faltering on several fronts:

- The precipitous fall in the prices of photovoltaic cells from 2008 to 2012 pretty much stopped in 2013, after rapid consolidation of the industry.

- The International Energy Agency now projects that installed global nuclear capacity in 2025 will fall 5 percent, to 24 percent below what will be needed to stay on the safe side of climate change.

- Carbon capture technologies, essential if the world is to keep consuming any form of fossil fuel, remain hampered by high costs, meager investment and scant political commitment.

• Even as costs of renewable energy in the United States continue to fall, the Energy Information Administration foresees only 16.5 percent of electricity generation will come from renewable energy sources by 2040, up from 13 percent today. More than two-thirds will come from coal and gas by that time. "Without some carbon capture and storage technology, drastic climate change is almost certainly unavoidable," writes Porter.

• According to the Energy Information Administration estimates, a carbon tax starting at $25 and rising 5% per year would lead to carbon dioxide emissions from American power plants of about one-fifth of what they are today.

• According to economists, such a tax would offer by far the most effective way to encourage business and individuals to reduce their use of fossil fuels and invest in alternatives.

• Admittedly, such a carbon tax is not enough. "This proposal still leaves the United States short of the 80 percent cut in greenhouse gas emissions that the White House is aiming for and that experts consider necessary by 2050 to prevent climatic havoc," Porter writes. "But at least it’s in the same order of magnitude."

Read Eduardo Porter's full NYTimes.com post here.

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