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C tC t ff tiff tiCostCost--effectiveness effectiveness Analysis of AB 32Analysis of AB 32Analysis of AB 32 Analysis of AB 32
MeasuresMeasuresMeasures Measures
Professor James (Jim) SweeneyPrecourt Institute for Energy EfficiencyPrecourt Institute for Energy Efficiency
Stanford University
The Challenge Under ABThe Challenge Under AB--3232
600
700
ear
Reduction Required
(175 MMT)Business
2020 AB32 Target
400
500
Tons
per
Ye
uiva
lent
)
Business As Usual
200
300
n M
etric
To
(CO
2E
qu
100
200
Mill
ion
01990 2000 2010 2020
CA Greenhouse Gas Emissions, 2002CA Greenhouse Gas Emissions, 2002--2004 Average: 2004 Average: (CO(CO22E Million E Million TonnesTonnes) Total: 469 MM ) Total: 469 MM TonneTonne
CA Greenhouse Gas Emissions, 2020 Projection: CA Greenhouse Gas Emissions, 2020 Projection: (CO(CO22E Million E Million TonnesTonnes) Total: 596 MM ) Total: 596 MM TonneTonne
Scoping Plan Estimated 2020 CO2E ReductionsTotal 169 MM Tonnes
33% RPS , 21.2 Low Carbon Fuel Standard , 16.5
High GWP Gas Measures , 16.2
Sustainable Forests 5Building, Appliance, CHP, Solar Water Heating, 26.4
Sustainable Forests , 5
Water Sector Measures , 4.8
Vehicle Efficiency 4 8Vehicle Efficiency, 4.8
Goods Movement: System Efficiency, 3.7
Heavy/Medium Duty Vehicles, 2.5
Pavley I & II, 31.7 Million Solar Roofs, 2.1
State Government, 1
Local Government , 2High Speed Rail , 1
Landfill Methane, 1
Methane Capture,Dairies , 1
Additional Emissions Reduction from Capped
Sectors , 35.2
Cost Effectiveness RequirementThe California Global Warming Solutions Act of 2006 (AB32) made California the first state to limit statewide global warming pollution.
Specifically, AB 32 stipulates:
• CARB must adopt rules and regulations to achieve “the maximum technologically feasible and cost‐effective greenhouse gas emission reductions.”
Cost‐effectiveness
A set of greenhouse gas mitigation measures is t ff ti d i t t i icost‐effective under a given target emission
reduction if and only if the set of measures t th i th i i t t i ttogether imposes the minimum cost to society (among all feasible measures) of meeting the t t i i d titarget emission reduction– This is defined in relation to a particular target
– We are referring to the social cost here
– Cost must include ancillary costs/benefits, e.g. non h i l igreenhouse gas environmental impacts
Measures vs Instruments
• I use “measures” to mean physical or process change to be undertaken e g adoption of plug inchange to be undertaken, e.g. adoption of plug‐in hybrid vehicles.
“i ” i• I use “instrument” to mean system to motivate the measures, e.g. minimum sales mandate or
d dcap‐and‐trade system
• Whether some cost‐effective measures can be implemented may depend on the instrument used.
owth)
s TC)
orage
r el Switching
150CO2 Reduction Supply Curve
rucks
al Ene
rgy Bill
ers
d gas system
nt ial (aggressive
gr o
wth)
n on Non
CO2 gases
rds ‐Pavley Bill
incentives and
PT
duction
e Capture
bon Capture & Sto
eothermal pow
e
nt Produ
ction Fue
100
res for LD
Vng m
edium/heavy t
mercial EE
ty EE
dential EE
nergy Efficien
cy
tand
ards ‐Fede
ra
utionfor Cem
ent
planning
and
othe
ng/leaks in oil and
orest m
anagem
en
tial and
Com
merc
P (aggressive grow
tillage
ng EE
on/ R
eforestation
cipal U
tility RP
S
very & Destructio
ommercial
econo
my standa
ustrial CHP (price i
oleu
m Refining
oleu
m & Gas Prod
ogas
Land
fill Methane
Indu
strial Carb G
plug
‐in hybrids
Small hydro
l
Cemen
50e
Fuel efficient tir
Diesel anti‐idlin
Fuel econo
my ‐
Other IO
U Com
mMun
icipal Utilit
Other IO
U Resid
IOU Indu
strial En
EE Policy
Ethano
l
Fuel econo
my st
Fly Ash Sub
stitu
Smart G
rowth p
Redu
ced ventin
Conservation
fo
CHP Re
side
nt
Indu
strial CHP
Conservation
IOU Emergin
Afforestatio
Mun
ic
Recov
esiden
tial and
Co
Fuel
Indu
Petro
Petr Bio
Wind
Light duty p S
Solar The
rmal
0US$ per Ton
CO2e
00 50 100
150
Cellu
osic
CHP Re
ls Produ
ction
k hybridization
0
Other Material
dium
/heavy truck
‐50
Least Uncertain More Uncertain Uncertain Very Uncertain
Med
‐100Total CO2 Reductions (Million Metric Tons CO2 Equivalent)
• Some measures will not be implemented absent economic instruments such as carbonabsent economic instruments such as carbon price or cap‐and‐trade system
S• Suggest:
– implement measures with cost below $35/tonne
–More fully analyze those with estimated y ycost below $70/tonne
–Reject any with higher cost.Reject any with higher cost.
CARB h bli h i i f i l• CARB has yet to publish its estimates of social costs of the various measures.
grow
th)
es l PTC)
Storage
wer uel Switching
150CO2 Reduction Supply Curve
y trucks
y eral Ene
rgy Bill
t hers
nd gas system
men
t
ercial (aggressive g
rowth)
on tion
Non
CO2 gas
dards ‐Pavley Bill
ce incentives and
P
g rodu
ction
ne Capture
arbo
n Capture & S
Geo
thermal pow
ent Produ
ction Fu
100
tires for LD
Vlin
gy ‐m
edium/heavy
mmercial EE
lity EE
side
ntial EE
l Ene
rgy Efficien
cy
y standards ‐Fed
e
tution
for Cem
ent
h planning
and
oth
ting/leaks in oil a
n forest managem
ential and
Com
me
HP (aggressive gr
on tillage
ging
EE
tion
/ Reforestatio
nicipal U
tility RP
S
covery & Destruct
Commercial
uel econo
my stand
dustrial CHP (pric
troleu
m Refining
etroleum
& Gas Pr
Biogas
Land
fill Metha
Indu
strial Ca
y plug
‐in hybrids
Small hydro
mal
Cem
50
O2e
Fuel efficient
Diesel anti‐idl
Fuel econo
my
Other IO
U Com
Mun
icipal Uti
Other IO
U Res
IOU Indu
strial
EE Policy
ic Ethanol
Fuel econo
my
Fly Ash Sub
sti
Smart G
rowth
Redu
ced vent
Conservation
CHP Re
side
Indu
strial C
Conservatio
IOU Emerg
Afforesta
Mun Rec
P Re
side
ntial and
C
Fu Ind
Pe PeB
Wind
Light duty
Solar The
rm
0US$ per Ton
CO
00 50 100
150
Cellu
os
CHP
ials Produ
ction
uck hybridization
50
Other Mater
Med
ium/heavy tru‐50
M‐100Total CO2 Reductions (Million Metric Tons CO2 Equivalent)
Least Uncertain More Uncertain Uncertain Very Uncertain
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