A Practical and Realistic
Climate Change Agenda
Honorable James L. Connaughton
February 2013

Current Situation in the United States
Global Goal:• Bush and Obama: 50% Reduction by 2050
• Implies 80% from Developed Nations• Not adopted by Congress under either party

National Goals:• Bush (2002): Improve GHG Intensity 18% by 2012 Goal was achieved in 2012
• Bush (2008): Stop Emission Growth by 2025
 May be on track, but outcome not certain• Obama (2009): Reduce 17% Below 2005 by 2020
 May be on track, but outcome not certain• Obama (2011): 80% Clean Electricity by 2035
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Contributing US Market Dynamics
Slower Economic Growth••

Lower Transportation Fuel Demand
Flat and Potentially Decreasing Electricity Demand

Advances in Efficiency and Price Demand Response
US Shale Gas• Transformational Technology Breakthrough• Collapsing Prices (consumers saved $100B)• Replacing Coal Electricity Generationooo

Gas: 15% in 1988, 32% in 2Q 2012
Coal: 57% in 1988, 34.5% in 2Q 2012
Renewables: Only up 1%, mostly wind at night

Pending: Natural Gas Vehicles, LNG Exports?
2http://www.youtube.com/watch?v=LPfGoNvsqt03

Contributing Policy Dynamics
9 Major Mandates

Supporting Incentives

Power Plant Air Pollution*
Vehicle Fuel Efficiency*
Renewable Fuel*
Lighting Efficiency*
Appliance Efficiency
Ozone Depleting Substances
Renewable Power* (30+ States)
Greenhouse Gases* (10 States)
Building Efficiency (State)n/aTax Credits, Subsidies
Tax Credits (expired)
Tax Credits, Subsidies
Rebates, Subsidies
n/a
Tax Credits, Emission Credits
n/aTax Credits, Subsidies

Pending: Clean Electricity Standard for Power Plants?
Economy-Wide “Cap and Trade” No Longer Plausible* Uses market-based approach to varying degrees

4Gas Up and Coal Down Sharply inElectricity Generation

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US Energy Emissions Returning to 1990 Levels

6RESULTS OF CHANGING US MARKET AND POLICYEIA Projections of Energy-Related CO2 Emissions: 2005-2013
8,500
8,000

Million Metric Tons CO2

AEO 2005
7,500

AEO 2006
AEO 2007

7,000

AEO 2008
AEO 2009

6,500

AEO 2010
AEO 2011

6,000

AEO 2012
AEO2013ER

5,500
5,000

7RESULTS OF CHANGING US MARKET AND POLICYEIA Projections of Energy-Related CO2 per Capita Emissions:
2005-2013
25
24
23
22
21
Metric Tons CO220
1918
1716
15
14

AEO 2005
AEO 2006
AEO 2007
AEO 2008
AEO 2009
AEO 2010
AEO 2011
AEO 2012AEO2013ER

131211108

DECLINING TO FLAT KAYA IDENTITY
Kaya Identity Components of U.S. CO2 Emissions: 1951-2040
300
250

Million Metric Tons CO2

200
150
100
500(50)
(100)
(150)

(200)

Carbon Intensity of Energy Supply

Energy Intensity

GDPPopulation
9Impact of Carbon Prices on US Energy Costs$20/ton adds about 20 cents to a gallon gasoline and 1 cent kwh to electricity
Additional Cost by Volume at:
Energy Product$20/Metric Ton CO2$50/MetricTon CO2$100/MetricTon CO2

Distillate Fuel Oil (Residential)($/gal)$0.20$0.51$1.01

Diesel (Transportation) ($/gal)

$0.20

$0.51

Motor Gasoline ($/gal)$0.18

Jet Fuel ($/gal)

Average2011
NominalPrice

Percent Increase from 2011 at:$20/Metric Ton CO2

$50/Metric Ton CO2

$100/Metric
Ton CO2

$3.66

5.5

13.9

27.7

$1.01

$3.58

5.7

14.2

28.3

$0.44

$0.89

$3.42

5.2

13.0

25.9

$0.19

$0.48

$0.96

$3.04

6.3

15.7

31.5

Residual Fuel Oil (All Users)($/gal)

$0.24

$0.59

$1.18

$2.64

8.9

22.3

44.7

Coal (Electric Power) ($/shortton)$37.00$92.51$185.02$46.38

79.8

199.5

398.9

Natural Gas (Residential)($/tcf)

$1.08

$2.71

$5.42

$11.05

9.8

24.5

49.1

Natural Gas (Electric Power)($/tcf)

$1.08

$2.71

$5.42

$4.87

22.3

55.7

111.3

Electricity (Ave. Price AllSectors) ($/kwh)$0.011$0.027$0.055$0.099

11.1

27.7

55.3

Sources: EIA, Documentation for Emissions of GHGs 2006, Table 6-1; EIA AEO 2013 Year-by-Year Reference Tables 8, 12, 13, 15 & 18.

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International Situation: Formal
Uncooperative UNFCCC Process
189 Countries—Only ~20 With Emission Share > 1%
Represented by Foreign Affairs or Environment Officials
Endless Re-Negotiation of Texts That Barely ChangeUnrealistic Expectations of Large New Wealth Transfers
Relatively Small and Inconsequential Financing
About 10,000 Conflict-Prone Stakeholders
Business Participation Very Limited and Declining
Massively Expensive Administrative Costs
Withdrawal of Canada, Russia, Japan from KP
Durban Agreement: We Agree to Agree in Three
Years on Agreed Actions Starting in Eight Years

11International Situation: Informal
Cooperative Processes Major Economies Forum (16 Nations + EU) Global Methane Initiative (“Methane to Markets”)
 Global Alliance for Clean Cookstoves Global Partnership for Low Emission Development
 Global Gas Flaring Reduction Partnership Adaptation Partnership Climate and Clean Air Coalition to Reduce Short Lived
Climate Pollutants Asia-Pacific Partnership Clean Development & Climate
 Other Regional, National, and Local Partnerships
 Traditional International Development Financing
12International: Informal Cooperative
Processes--“BizMEF”

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Different Approaches Yield Different Results
UNFCC/Kyoto Protocol(1992/1997)

Montreal Protocol(1987)

 Top down, economy-wide approach Bottom up, sector specific approach Single, inflexible short term targets

 Multiple, flexible long term targets

 No developing nation commitments

 Developing nation commitments Small and declining private sector role

 Robust private sector engagement

 Promises of major wealth transfers

 No promise of major wealth transfers

 No meaningful technical review process Objective technical review process

 No meaningful economic review process Objective economic review process Focused on international implementation

 Focused on national implementation

 Achieving less GHG reductions than KP Achieving more GHG reductions than KP

Mostly Unsuccessful
International Treaty

Mostly Successful
International Treaty
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Go “Back to the Future” and Rationalize Process
Original 1992 UNFCC Principles

Kyoto
ProtocolMontreal
ProtocolCooperate as widely as possible✗✔

Share common responsibility; differentiate according
each country’s circumstances✗✔

Respect national sovereignty of environmental anddevelopment policies and priorities✗✔

Re-evaluate science, technology, and economics
continually✗✔

Focus on actions producing net economic andenvironmental co-benefits✗✔

Pursue comprehensive approach at global, regional,
national and local levels✗✔

Address all greenhouse gases, sources and sinks taking
into account relative contribution✗✔

Coordinate actions to assure sustained economic growthand poverty eradication✗✔
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