Hillary Clinton’s climate change plans

The US presidential contenders are laying out their plans for climate change mitigation and adaptation. Mrs Clinton’s proposals are noteworthy for their commitment to re-engage with the global negotiations over future emissions caps and for her ambitious acceptance of the need for an 80% reduction in US emissions by 2050. The 80% target is rapidly becoming the preferred option of world politicians, a more ambitious target than the UK’s 60% figure. (The UK’s Climate Change bill will allow the new Climate Change Committee to recommend an increase to 80% if appropriate.)

Mrs Clinton espouses a cap-and-trade system for US emissions. Unlike the EU’s approach, she proposes to auction the permits. She will continue the disastrous US policy of encouraging the conversion of corn to bioethanol. She looks to renewable electricity to provide 25% of US power.

She will add to federal expenditure on R+D, but the number proposed is insufficient to have much effect. She stresses the high cost of energy (gas, motor fuels and electricity) to American citizens but not does mention that the impact of her measures will be to increase energy costs, not reduce them.

Mrs Clinton’s plan is calm and measured. Contrast her statesmanlike tone with David Crane, the CEO of a large electricity generating company, in a 14 October article in the Washington Post. Crane writes, ‘We are not running out of time, we have run out of time’ [his italics]. He argues that the US government should put an immediate price on carbon emissions to incentivise a rapid switch to carbon capture and storage in the US power sector. His tone is desperate: ‘I am a carboholic’ but I want to stop, he writes. We could all do with a similar sense of urgency from Mrs Clinton.

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Cap-and-trade

What she says
Cap-and-trade systems such as the European Emissions Trading Scheme allocate permits to polluters. Clinton will introduce a similar scheme in the States. In the EU, the permits are largely handed out free to the major CO2 producers. Clinton says she will auction the permits and use a small part of the revenue for a new R+D fund.

What she doesn’t say

1. There’s no indication of much of the US economy she intends to cover. In the EU, the scheme takes in about 50% of total greenhouse gas output.
2. Similarly, she offers no clue as to how tight the cap will be. For example, she might have said that she would auction permits for 2bn tonnes of CO2 output across industries that currently produce 2.5bn tonnes. Nor does she say how fast she will reduce the allocation.
3. She gives no indication of how much revenue she expects.

Electricity consumption
What she says
She will introduce measures that will reduce energy consumption by 20% below the forecast figures for 2025. 25% of electricity will come from renewable sources. She offers no encouragement to the nuclear industry.

What she doesn’t say

1. A 25% reduction in electricity consumption will still leave electricity use slightly higher in 2025 than it is today.
2. If 25% of electricity is to come from renewable sources, then 70% of the investment in power generation from today onwards will have to be devoted to non-fossil fuel technologies. There is no current sign of this happening and a major change of direction will be required.
3. The US Energy Information Agency (EIA) suggests that a target of 25% renewables will add about 6% to electricity prices. The Clinton plan doesn’t mention this.

Renewable Fuels
What she says
Her target is ‘60bn gallons’ of ethanol and bio-diesel. She intends to set a target that will oblige biofuels producers to show that each gallon of biofuel uses 80% less fossil fuel in its cultivation and manufacture.

What she doesn’t say

1. 60bn US gallons is approximately 25% of motor fuel use by 2025, according to Energy Information Agency projections. The number of miles travelled in 2025 will be about 40% greater than today, if EIA forecasts are correct. Therefore, even this volume of biofuels will not by itself reverse the need for rising oil consumption.
2. There is no mention of the impact on prices, either of fuel at the petrol pump, or of agricultural commodities. In a document from earlier this year, the EIA (a part of the US government and thus not necessarily opposed the expansion of biofuels) said that the target chosen by Mrs Clinton would result in a doubling of corn prices. If made from corn, the biofuels would require about 80% of today’s total US crop.
3. The target for improving the fossil fuel efficiency of making biofuels is highly ambitious. At the moment, the fossil fuels savings from manufacturing biofuels are extremely limited. To get to the point at which 2 units of fossil fuel are used to make 10 units of bioethanol requires technical advances beyond those that can currently be envisaged. The current boom in ethanol production is adding noticeably to natural gas demand as plants need heat and power to turn corn starch into a useable fuel.
4. Bioethanol is heavily subsidised. According to the EIA it will not be cost-competitive until 2015. So Mrs Clinton’s plan will either raise fuel prices or require more federal subsidy. This point is not discussed.

Fuel efficiency standards for automobiles
What she says
The failure to improve the fuel efficiency of US cars over the past fifteen years is one of the most damaging failures of national policy. Mrs Clinton looks to more than double economy standards by 2030. She rails against ‘the untenable foreign trade situation in which the United States transfers funds that are borrowed from China to Saudi Arabia’ to pay for its oil.

What she doesn’t say
The proposed standards only bring the US fuel economy standards in 2030 to approximately the level today of the best European and Asian cars.

R+D
What she says
$5bn a year will be spent on energy research and development, a multiple of what is spent today. Money will largely come from the oil companies. She says that they need ‘to do their share in funding clean energy’.

What she doesn’t say
Total Federal funding of R+D is about $140bn a year, of which the bulk goes on defence-related projects. NASA gets over $12bn to plan, inter alia, for future trips to the moon. Alternative energy research in Mrs Clinton’s administration is to get less than 40% of this particular allocation.

‘Smart grids’ in large cities
What she says
Mrs Clinton looks forward to the creation of 10 ‘smart grid’ cities. These cities will invest in technologies for reducing and smoothing the demand on electricity generators. She wants to implement technologies that allow electricity pricing to vary according to the level of local demand. She is keen on using the batteries of ‘plug-in’ hybrid cars to return power to the electricity grid when it is in short supply. (For more details on electric cars, please the article on Shai Agassi in this edition of Carbon Commentary.)

She says that demand reduction programmes can reduce total demand by 5%.

What she doesn’t say
She suggests that using the batteries of cars will provide $2,000-$4,000 a year of income to hybrid car owners and be an important means of avoiding costly peaks in demand, particularly during the air conditioning season. This is an unrealistically large figure and could only conceivably be achieved if the large batteries of an all-electric car were discharged and recharged several times a day at times of high and low prices respectively. This is impossible, even in theory.

Other main points

She argues for:

1. A federal mortgage bank to provide loans for energy efficiency improvements.
2. A major attempt to improve the energy efficiency of the 20m worst insulated homes.
3. A job training programme to equip 100,000 people with the skills to install and maintain low-carbon technologies and energy efficiency measures.
4. Investment in public transport (the sums mentioned are utterly derisory).
5. 10 large carbon capture and storage projects. The UK has proposed one.
6. Improved energy efficiency standards for home appliances. The US Energy Star programme has been effective and robust. There is great merit in tightening standards and making them apply to a wider range of standards. But energy efficiency is currently fighting a losing war against the expansion of the number and size of appliances in US (and European) homes.

Mrs Clinton’s plans are evidence of the growing seriousness with which global warming is treated in the US. Some of her proposals are good and will use sensible market mechanisms to reduce energy use below what it might otherwise be. But the reader of her climate change proposals is left with the feeling that the measures were thrown together without much careful thought, and certainly not with any acknowledgement that cutting emissions 80% in 40 or so years is a difficult and painful task.