A news item concerning last week’s release of the National Petroleum Council’s “Prudent Development” report referred to a recommendation supporting a national tax on carbon. That caught my attention. Given the NPC’s makeup, a consensus on such a controversial issue would be surprising. The actual text of the report proved somewhat less dramatic on the climate policy front, but no less worthwhile for its comprehensive assessment of the abundance of North American hydrocarbon resources, as well as the development approach “necessary for public trust, protection of health, safety and the environment, and access to resources.” The report doesn’t just focus on macro concerns about climate change and other environmental issues, but also on timely details such as the methane emissions, water and land-use impacts involved in shale gas production and other resource development.
For those not familiar with the NPC, the organization is charged with advising the Secretary of Energy on matters relating to oil and gas, though in practice it looks at a much broader array of energy issues. In 2007 I helped with the renewable energy analysis in the group’s previous study, entitled “Hard Truths.” The current study is one of two requested of the NPC by Secretary Chu; the other will look at future transportation fuels and is due out in the first half of next year. What makes these reports unusual is that they incorporate the views of academics, government officials, non-governmental organizations, and the legal and financial sectors, along with those of the energy industry. In the current study, just under half the participants represented oil and gas companies, while the Emissions and Carbon Regulation Subgroup included members from the National Resources Defense Council and US EPA, and the Environment and Regulatory Subgroup was chaired by someone from the Environmental Defense Fund. I think we’d all benefit from more such “strange bedfellows” collaborations.
The report’s specific recommendation on carbon pricing as a mechanism for addressing greenhouse gas emissions appears in the Executive Summary and originates in an entire chapter on “Carbon and Other Emissions in the End-Use Sectors.” Although it’s much more generic than the Fuelfix article indicated, it’s still noteworthy. It deals with the need to internalize emissions costs into fuel and technology choices, with a carbon tax mentioned as just one option among a range of measures for establishing an explicit or implicit price on carbon. It states,
“As Congress, the Administration, and relevant agencies consider energy policies, they should recognize that the most effective and efficient method to further reduce GHG emissions would be a mechanism for putting a price on carbon emissions that is national, economy-wide, market-based, visible, predictable, transparent, applicable to all sources of emissions, and part of an effective global framework.”
It goes on to address non-market mechanisms such as performance standards and clean energy standards, and how a policy on carbon should be phased in. While individual oil and gas companies have supported cap and trade or a carbon tax either individually or within multi-industry groups, I can’t recall such a broad cross-section of this industry going along with the idea of carbon pricing, even in this non-specific manner.
The timing of this is interesting. It’s hard to envision a comprehensive climate bill passing the Congress between now and the November 2012 election, or even being introduced on anything other than a symbolic basis. The pork-laden monstrosity of the Waxman-Markey bill succeeded only in making cap and trade toxic, and I can’t imagine a worse environment for introducing any kind of new tax–a price on carbon is clearly a tax–even if the concept behind cap and trade has a solid bipartisan pedigree. Short of the miraculous materialization of a carbon tax as a compromise revenue solution from the deficit-fighting Supercommittee, carbon pricing in the US looks dead until 2013 and possibly well beyond. I’m also starting to see more comments along the lines of this one from the blog of the Information Technology and Innovation Foundation suggesting that policies promoting innovation might be a lot more important in addressing climate change than any level of carbon pricing that could realistically be implemented here.
So whether you regard this recommendation by the NPC as an attempt to restart a stalled debate on carbon pricing, or merely a tardy entry in a formerly crowded field, I think it also signals that the energy industry isn’t oblivious to the fact that its emissions–including the lion’s share associated with end-user consumption of their products–must eventually be dealt with. Chances are, that will await a return to economic health and stability, when US consumers, voters and taxpayers might be expected to prove more willing to incur the sacrifices this will entail. The report also includes a good perspective on the considerable North American resource upside that could be unleashed with different policies than the ones now in place, and that might just hasten the arrival of more favorable economic conditions for carbon policy.
Secretary Chu’s letter of September 16, 2009, http://www.npc.org/NPC_NARD_Integrated-Study-Plan_9-14-10.pdf which instructed the NPC to do the “Prudent Development…” study throws some light on why the study contains a reference to a price on carbon. Chu simply proclaimed to the NPC in the first sentences of that letter: “It is the policy objective of the United States to protect our Nation from the serious economic and strategic risks associated with our excessive reliance on foreign oil and the destabilization effects of a changing climate. All energy uses and supply sources must be reexamined in order to enable the transition towards a lower carbon, more sustainable energy mix.” And deeper into letter it says this: “Of particular interest is the Council’s advice on policy options that would allow prudent development of North American natural gas and oil resources consistent with [these] government objectives….”. There isn’t any grey area here – the NPC had to respond with some sort of opinion about what overall policy might allow the US to emit less carbon. The fact that the NPC came up with what Chu directed them to do, in the context of decades of implacable opposition by the US industry and right wing think tanks to exactly this type of policy, appears meaningless. I wonder why the fossil fuel industries of the US don’t form a lobby group to show up in Washington to independently add their weight to what you say this NPC report means, i.e. that they are at last understanding that GHG emissions must be dealt with. It seems obvious. They don’t think they are going to be forced to do anything just yet and they could care less about whatever size the problem becomes while they are stalling. Secretary Chu’s letter of September 16, 2009, which instructed the NPC to do the “Prudent Development…” study throws some light on why the study contains a reference to a price on carbon. Chu simply proclaimed to the NPC in the first sentences of his letter instructing them to do their work: “It is the policy objective of the United States to protect our Nation from the serious economic and strategic risks associated with our excessive reliance on foreign oil and the destabilization effects of a changing climate. All energy uses and supply sources must be reexamined in order to enable the transition towards a lower carbon, more sustainable energy mix.” And deeper into letter it says this: “Of particular interest is the Council’s advice on policy options that would allow prudent development of North American natural gas and oil resources consistent with [these] government objectives….“. There isn’t any grey area – the NPC had to respond with some sort of opinion about what overall policy might allow the US to reduce its greenhouse gas emissions. The fact that the NPC came up with what Chu directed them to do, in the context of decades of implacable opposition by the US industry and right wing think tanks to exactly this type of policy, appears meaningless. I wonder why the fossil fuel industries of the US don’t form a lobby group to show up in Washington to independently add their weight to what you say this NPC report might mean, i.e. that they are at last understanding that GHG emissions must be dealt with. It seems obvious. They don’t think they are going to be forced to do anything just yet and they could care less about whatever size the problem becomes, i.e. whatever size of economic and strategic threat to the United States develops, while they are stalling.
Dave,There is OECD and NON-OECD; those are 2 different world’s. I just posted this comment to another article, but it applies to this one as well. In view of the estimates of the EIA, whatever the OECD nations do will not be timely and therefore ineffectual regarding global warming, because the NON-OECD are going to go their merry way no matter what. The best effort the OECD nations can do is to dump the renewables, which have a lot of baggage (i.e., doubts about CO2 reduction, high capital cost, high visibility), opposition, etc., and maximize energy efficiency, which has minimal baggage and opposition, etc. See below. A just-released report from EIA shows continuing world energy consumption growth.http://www.eia.gov/forecasts/ieo/world.cfmSee figure 12World energy consumption by fuel (quadrillion Btu) Liquids: From 173.2 in 2010 to 225.1 in 2035Natural gas: 116.7 to 174.7Coal: 149.4 to 209.1Nuclear: 27.6 to 51.2Renewables: 55.2 to 109.5Renewables fraction of total consumption: From 10.6% in 2010 to 15.2% in 2035Fossil fraction of total consumption: 84.1% to 79.1%This means global warming will continue unabated, because NON-OECD nations (China, India, Brazil, Russia, etc.,) will have energy consumption growth far outpacing the continued energy consumption growth of the rest of the world.Any expensive investments in renewables to reduce the world’s CO2 would be so totally insignificant regarding global warming as to be laughable.For poorer states, such as Vermont, recently hit with a billion dollar flood damage, it would be much wiser and more economical to shift subsidies away from expensive renewables that produce just a little of variable, intermittent energy and use those funds for increased energy efficiency, because it provides the quickest and biggest “bang for the buck”, AND it is invisible, AND it does not destroy pristine ridge lines/upset mountain water runoffs, AND it would more effectively reduce CO2, AND do it without controversy.Willem Posthttp://theenergycollective.com/willem-post/57905/wind-power-and-co2-emis…http://theenergycollective.com/willem-post/59747/ge-flexefficiency-50-cc…http://theenergycollective.com/willem-post/61309/lowell-mountain-wind-tu…http://theenergycollective.com/willem-post/61774/wind-energy-expensivehttp://theenergycollective.com/willem-post/64492/wind-energy-reduces-co2…