A Key Moment for California Climate Policy

                                                      Comments due by Dec4, 2016

The past year has been a crucial time in international climate negotiations.  In December, 2015, in Paris, negotiators established an agreement on the next round of targets and actions to succeed the Kyoto Protocol, which was signed in 1997 and will effectively close down in 2020.  In Paris, negotiators set up a new and meaningful agreement for multinational action through individual country “Intended Nationally Determined Contributions” (INDCs).  The Paris round was crucial, because it expanded the coalition of contributionsfrom countries responsible for 14% of global emissions under Kyoto (Europe and New Zealand) to 187 countries responsible for 96% of emissions under the Paris Agreement.

California’s Role in Global Climate Change Policy

California sent a delegation to the Paris talks. While not officially a party to the negotiations, California government officials attended to show support for broad and meaningful action.  For many years, spurring action beyond California’s borders has been the key rationale for developing a California-based climate policy.  This began with Assembly Bill 32 (AB 32), the Global Warming Solutions Act of 2006.  Initially, the focus was on encouraging action within the United States, including federal legislation, state-level actions, and multi-state compacts, but subsequent domestic action turned out to be much less than originally anticipated. As a result, California’s focus shifted to the international domain.

This is a good time to consider how the State can best demonstrate leadership on this global stage.  Action by all key countries, including the large emerging economies – China, India, Brazil, Korea, and South Africa – will be necessary to meaningfully address the climate problem.  Significant multinational contributions will be necessary to avoid having California’s aggressive in-state actions be for naught.  Absent such multilateral action, ambitious California policies do little or nothing to address the real problem.

But California can play a very important role by showing leadership – in two key ways.  One is to demonstrate a commitment to meaningful reductions in (greenhouse gas) GHG emissions.  In this regard, California has more than met the bar, with policies that are as aggressive as – if not more aggressive than – those of most countries.

The other way is to show leadership regarding how reductions of GHG emissions can best be accomplished – that is, in regard to progressive policy design.  California has a sophisticated GHG cap-and-trade system in place, which while not perfect, has many excellent design elements.  Countries around the world are now planning or implementing cap-and-trade systems, including in Europe, China, and Korea.  These countries are carefully watching decisions made in California, with particular attention to the design and implementation of its cap-and-trade system.  California’s system, possibly with a few improvements, could eventually be a model for even larger systems in other countries.

Can California Provide a Good Model of Progressive Policy?

Unfortunately, California’s climate policy has not relied heavily on its cap-and-trade system to achieve state targets.  Furthermore, rather than increasing reliance on this innovative market-based climate policy over time, recent proposals have doubled-down on the use of less efficient conventional policies to achieve GHG reductions. While some of these so-called “complementary policies” can be valuable under particular circumstances, they can also create severe problems.

One example of this is the attempt to employ aggressive sector-based targets through technology-driven policies, such as the Low Carbon Fuels Standard (LCFS).  In the presence of a binding cap-and-trade regime, the LCFS has the perverse effect of relocating carbon dioxide (CO2) emissions to other sectors but not reducing net emissions, while driving up statewide abatement costs, and suppressing allowance prices in the cap-and-trade market, thereby reducing incentives for technological change.  That is bad news all around.  These perverse outcomes render such policies of little interest or value to other regions of the world.

The magnitude of the economic distortion is illustrated by the fact that allowances in the California cap-and-trade market have recently been trading in the range of $12 to $13 per ton of CO2, while LCFS credits have traded this summer for about $80 per ton of CO2.

While reduction in transportation sector GHG emissions is clearly an important long-run objective of an effective climate policy, if the approach taken to achieving such reductions is unnecessarily costly, it will be of little use to most of the world, which has much less financial wealth than California and the United States, and will therefore be much less inclined to follow the lead on such costly policies.

The Path Ahead

With China now the largest emitter in the world, and India and other large developing countries not very far behind, California policies that achieve emission reductions through excessively costly means will fail to encourage other countries to follow, or even recognize, California’s leadership.  On the other hand, by increasing reliance on its progressive market-based system, California can succeed at home and be influential around the world.

Steven Hawkings' prediction

                             
                                      Comments due on or before Nov. 27, 2016

Stephen Hawking thinks humanity has only 1,000 years left of survival on Earth and that our species needs to colonize other planets.

The famed physicist made the statement in a speech at Oxford University Union, in which he promoted the goal of searching for and colonizing Earth-like exoplanets. Developing the technology to allow humans to travel to and live on faraway alien worlds is a challenge, to say the least. But is Hawking right that humanity has only 1,000 years to figure it out?

The dangers Hawking cited — from climate change, to nuclear weapons, to genetically engineered viruses — could indeed pose existential threats to our species, experts say, but predicting a millennium into the future is a murky business.

"While I respect Stephen Hawking enormously, speculating on how long Homo sapiens will survive before extinction is foolish," said John Sterman, director of the MIT Sloan Sustainability Initiative. "Whether we survive and thrive or descend into chaos is not something to predict or lay odds on, but a choice to be made." [Top 10 Ways to Destroy Earth]

Sustainable living?

If climate change continues apace, it will likely lead to a great deal of friction for the human species.

"There may be incredible amounts of food and water stress in some regions; combined with sea-level rise, this will lead to massive numbers of environmental refugees — enough to make the Syrian diaspora seem simple to absorb," said Shawn Marshall, a professor of geography and a climate change researcher at the University of Calgary in Canada.

Humanity is surviving now only by depleting the planet's natural resources and poisoning its environment, Sterman told Live Science. The nonprofit Global Footprint Network estimates that humanity uses up the resources of 1.5 Earths each year, essentially overdrawing from the planet's natural bank account. The problems of sustainability can't wait 1,000 years, Sterman said.

"Whether we can prevent damaging climate change, and the broader issue of whether we can learn to live within the limits of our finite world, will likely be determined this century," he said.

Emmanuel Vincent, a research scientist at the University of California, Merced and founder of the outreach organization Climate Feedback, echoed the call to make sustainable decisions now.

"It is important to remind [people] that one cannot predict whether a catastrophic event will wipe out humans within the next thousand years," Vincent told Live Science. "What Hawking is doing here is speculating on the risk that this will happen, and he estimates that the probability of extinction is high. While I agree that this is possible, I would like to emphasize that this primarily depends on how we manage to prevent such catastrophic outcome as a society." [7 Iconic Animals Humans Are Driving to Extinction]

Human extinction

This doesn't mean humans will necessarily go extinct if we make poor choices. Climate-wise, the planet is currently about 1 degree Celsius (1.8 degrees Fahrenheit) warmer than preindustrial averages, Marshall said. (The past year has set multiple modern heat records.)

In comparison, temperatures during the Jurassic and Cretaceous periods were about 10 degrees C (18 F) warmer than preindustrial averages, or about 25 degrees C (45 F) compared with today's 16 degrees C (29 F), Marshall said. Yet life was quite abundant at that time, he told Live Science.

"It would be a habitable but rather different world," he said. "We'll run out of fossil fuels before we evaporate the oceans away."  

So humans probably won't manage to actually bake themselves in an oven made of greenhouse gases, though tropical areas may become too hot for habitation, Vincent said. The real question is whether humans would be able to handle the upheaval that climate change would bring as coastlines vanish, diseases spread and weather patterns change.

"On its own, I don't see how climate change would lead to human extinction," Marshall said. "It would have to be through the social unrest triggering nuclear warfare, or some other societal implosion as a result of the environmental degradation."

Already, there are warning signs beyond warming temperatures. About half of global wildlife has been wiped out over the past 50 years, Vincent said. The situation is serious enough that many scientists believe the planet is in the midst of its sixth mass extinction.

"Anyone who thinks we can solve these problems by colonizing other worlds has been watching too much 'Star Trek,'" Sterman said. "We must learn to live sustainably here, on the one planet we have, and there is no time to lose."

(Sustainable Living)

EV vs ICE

                                               Comments due on or before Nov. 19, 2016

With the success of Tesla and the current trend to have every major car manufacturer offer an electric vehicle it is becoming more important than ever to explain in simple language the essentials of what is the major fuel consumption difference between an internal combustion engine (ICE) and an electrically driven vehicle (EV). There is some truth in the popular belief that EV is overall more environmentally friendly than ICE but what is crucial is to understand clearly that there are some factors that can diminish and even eliminate the perceived advantage of an EV, namely how the electricity was generated and its retail cost. On the other hand the advantage of an EV can be enhanced through producing cleaner electricity ; from natural gas, solar, wind or even nuclear; and through higher prices for gasoline at the pump due to higher taxes.

The following are some facts that are not clearly understood by many consumers:

A zero emissions electric powered engine does not exist, yet. It is true that the driver of a Tesla (TSLA), Nissan Leaf (NSANY), Chevrolet Volt (GM) or any of the other EV vehicles does not emit directly any CO2 while operating the EV vehicle. But the electricity does not get generated from thin air. If the electricity is being produced by a coal fired power plant or any other fossil fuel then the electric power used to charge the batteries of EV vehicles would not result in any significant decrease of CO2 emissions. Many studies have actually shown that in many cases CO2 emissions would actually increase.

In the US the production of an average KWH of electricity generates about 1.2 pounds of CO2 (as per data from US Energy Information Administration). In some localities the emissions are greater and in others smaller than that since different regions produce electricity from different fuel sources.  Furthermore an average KWH stored in a battery drives an EV about 3 miles. EX.  VOLT has a battery whose capacity is 18.4 KWH and a range of 53 miles while the 85 KWH in a Tesla has a range of 265 miles. So how does this compare to an internal combustion engine ?  Every gallon of gasoline produces about 20 pounds of CO2 when fully combusted although the gallon weighs less than 7 pounds. That is explained by the weight of the oxygen that is needed for the combustion.(USEIA calculates that a gallon of gasoline free from ethanol produces 19.64 pounds of CO2)

Based on the above it is clear that an EV vehicle will travel 1 mile and emit 0.4 pounds of CO2 (1.2pounds/3 miles) while an ICE vehicle that averages 20 mpg  emits about 1 pound per mile (20 ponds/20 miles). If a typical vehicle is to be operated for 10,000 miles a year then an EV vehicle would produce 6000 less pounds pf CO2 compared to a 20mpg ICE car. The market value of this 2.7 metric tons of CO2 is under $100 per year. Note though, that as the mpg increases in an ICE vehicle then it approaches the emission cleanliness of an EV. Actually an ICE powered vehicle that has a fuel efficiency of 50 mpg will emit the same amount of CO2 per mile as the average EV vehicle using a typical US produced KWH of electricity.

Financial comparisons

Unfortunately some individuals are not that much interested in the environmental advantages of EV over Ice but are more financially pragmatic, they would be interested in an EV purchase provided that the initial price premium can be reasonably expected to result in sufficient  fuel saving. Again the facts show, unfortunately, that the EV premiums are not justified on a cash flow basis. Let us look at the scientific figures:                                    

Retail price of KWH differs substantially from one region of the country to another. In some cases a KWH retails for up to $0.26 cents (NYC and Westchester including taxes and surcharges) while in other regions it is under $0.1 (Oklahoma 0.0706; Texas 0.076; Virginia 0.081).Clearly, charging an EV in the state of NY is much more expensive than the state of Oklahoma.  This implies that EV’s will probably need a much longer period of time to recapture the initial premium charged by the manufacturers.  Based on the above, it is clear that fuel cost for an EV could be as high as 9 cents per mile and possibly as low as 3.5-4 cents a mile in some cases. How does this compare to an ICE powered automobile? Assume an average price of $2.4 for a gallon of unleaded regular and the CAFÉ standard of 35.5 mpg (Corporate Average Fuel Economy as set by the EPA) then the average cost of gasoline per mile would be under 7 cents which is less expensive than the cost of electricity to charge an EV in areas like NY. But since not many cars get the 35.5 mpg efficiency let us assume that the average automobile achieves an efficiency of 20 mpg. In this case the fuel cost per mile would be 12 cents. Such a cost will be only 3 cent per mile more expensive than the fuel cost for an EV in an area similar to that of NYC but it could be 8 cents more expensive than fueling an EV in such areas as Texas.  So are the potential fuel savings of an EV vehicle large enough to rationalize the initial $10,000 premium for an EV charged by the manufacturer? (General Motors’ MSRP for the Chevrolet Cruze is about $10,000 less than that for a  Chevrolet Volt). Unfortunately, the above simple calculations make it clear  that no rational person would be willing to pay a premium of about $10,000 in order to actualize savings of about  $300-800 per annum.

Conclusion

             

 The EV fad is not about to make major inroads into the car market. Its vehicles are not zero emissions and their advantages over ICE are limited by science as well as tax policy.The average consumer will not pay a premium for a vehicle whose fuel results in almost the same volume of CO2 emissions as an ICE powered vehicle and whose fuel cost savings cannot justify the high premium being charged by the manufacturers.

This does not mean that there will not be a market for EV vehicles. It only suggests that a mass market for EVs is highly unlikely under the current conditions. Luxury brands such as Tesla, Mercedes Benz and BMW would have no problem catering to a small niche of conspicuous consumers that are driven by high prices, scarcity and perceived quality.  A mass market of EV vehicles will not develop unless such automobiles consume fuel whose total direct and indirect emissions are less than ICE vehicles and whose projected annual savings in fuel cost justify the initial price premium. That can be accomplished either through higher gasoline prices or much lower initial price premium or a combination of both. This is why I do not think that the BOLT by the Chevrolet division of General Motors (GM) will be a big success in its current format.