ACHIEVING THE U.S. 2025 EMISSIONS MITIGATION TARGET January 2016 Update

By Maria Belenky

Maria Belenky is a Senior Associate at Climate Advisers. Please address comments and suggestions to belenky@climateadvisers.com

Photo by Steve Jurvetson

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Executive Summary In March 2015, the United States officially submitted its intended nationally determined contribution (INDC) toward the Paris global climate agreement—a pledge to lower its greenhouse gas (GHG) emissions by 26%-28% below 2005 levels by 2025. Since the target was first announced in a joint release with China, the question most frequently asked by many following the global climate debate has been: are these reductions achievable? Last spring, Climate Advisers released an initial assessment of the suite of recently finalized, proposed and planned regulations pushed forward by the Obama administration, and how close those efforts brought the U.S. to achieving the target range of emissions reductions by 2025 and through 2030. In this report, we update these projections based on recent policy developments and new reference case emissions data made available through the 2015 U.S. Energy Information Administration’s Annual Energy Outlook and the U.S.’s Second Biennial Report to the UNFCCC. Our main findings include:

• The suite of recently finalized, proposed and planned policies pushed forward by the Obama administration can reduce U.S. GHG emissions by up to 23% below 2005 levels by 2025—representing about 80% of the needed action. This is within striking distance of the U.S. target.

• Already finalized policies can meet half of the needed reductions in the absence of major economic shifts or changes in emissions accounting.

• To achieve the U.S. pledge, the next President would need to vigorously implement the Obama administration policies and propose new emission reduction measures.

• Weak policy implementation, coupled with lower-than-expected natural carbon sequestration from U.S. lands, could yield emission reductions in the range of only 15% below 2005 levels by 2025, far below the U.S. 2025 pledge.

Note: The reference case is presented as a range to account for low and high land sinks. The pessimistic scenario represents a worst-case pathway resulting from a lower ability of U.S. forests to capture carbon combined with low abatement from domestic action. The optimistic scenario represents a best-case path, with high natural carbon sinks and high emissions reductions from domestic action.

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The U.S. 2025 Target: Can it be Achieved and How? In March 2015, the United States officially submitted its intended nationally determined contribution (INDC) toward the new global climate agreement—a pledge to lower domestic greenhouse gas (GHG) emissions by 26%-28% below 2005 levels by 2025. This target built on the 2009 U.S. commitment to reduce emissions by 17% below 2005 levels by 2020. In the months since the most recent goal was announced in a joint release with China, one of the most frequently asked questions has been: are these reductions achievable? In this report, we evaluate how close the suite of existing, proposed and planned policies bring the U.S. to meeting its climate targets. Although the U.S. does not have a 2030 target, we project emissions through 2030 to provide a sense of the country’s longer-term emissions trajectory. The first iteration of this report was released in April 2015. This version updates both the projected emissions in the reference case as well as the potential abatement from actions put forward by the current administration. Key revisions include: Historic emissions:

! Historic emissions have been adjusted to match the Environmental Protection Agency’s new Inventory of U.S. GHG Emissions and Sinks: 1990-2013. This version of the Inventory revises historic U.S. emissions upward—largely the result of aligning U.S. accounting of the global warming potential of non-CO2 gases with the higher values presented in IPCC’s Fourth Assessment Report.

Baseline projections:

! Projected CO2 emissions through 2030 have been updated to reflect the Energy Information Administration’s 2015 Annual Energy Outlook. The new Outlook projects lower energy-related emissions in its reference case. The change is relatively minor and partially reflects the implementation of several new energy conservation standards.

! Projected emissions of non-CO2 gases are harmonized with the U.S.’s Second Biennial Report to the UNFCCC. These include slightly lower projected baseline emissions for most gases—the result of new policies implemented since the publication of the First Biennial Report—as well as higher expected sequestration from natural land sinks. The latter revision follows a two-year multiagency process to update and improve land use emissions accounting.

Additional emissions reductions from actions:

! Emissions impacts have been updated for finalized policies. These include the Clean Power Plan, strengthened ozone standards, new SNAP program rules, and several energy conservation standards for appliances.

! Emissions impacts have been added for newly proposed policies. These include updated fuel economy standards for trucks, limits on methane emissions from new oil and gas facilities, revised refrigerant management requirements, and a host of energy conservation standards for buildings and appliances.

Our analysis presents two potential emissions pathways based on business-as-usual (BAU) emissions and expected reductions from actions. The pessimistic scenario represents high BAU emissions due to a lower ability of U.S. forests to capture carbon, combined with low abatement from domestic action—possibly as a result of delayed or weak implementation of actions such as the Clean Power Plan. The

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optimistic scenario includes lower BAU emissions due to high natural carbon sinks and more aggressive emissions reductions from domestic actions. These scenarios are summarized in Table 1. Table 1. Scenarios Summary Variables Low emissions BAU with high carbon sinks High emissions BAU with low carbon sinks Low abatement Low estimate for reductions from the power sector, methane, and HFCs High abatement High estimate for reductions from the power sector, methane, and HFCs Scenarios Pessimistic High emissions + Low abatement Optimistic Low emissions + High abatement

Business-as-usual: Projected U.S. emissions through 2030 U.S. BAU emissions include the projected release of six gases: carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulphur hexafluoride (SF6), as well as CO2 natural carbon sinks. BAU is measured taking 2014 as the base year. The high and low BAU scenarios, in million metric tons of CO2 equivalent (MMTCO2-eq), are provided in Table 2. Table 2. Projected Greenhouse Gas Emissions Through 2030 (MMTCO2-eq) 2005 2013 2020 2025 2030 CO2 6,134 5,505 5,664 5,677 5,679 CH4 708 636 670 674 682 N2O 356 355 338 335 334 HFC 131 163 211 250 265 PFC 7 6 5 5 7 SF6 14 7 9 9 10 Sinks - low -912 -882 -1,044 -908 -689 Sinks - high -1,191 -1,201 -1,118 Net GHG - low 6,438 5,791 5,706 5,749 5,859 Net GHGs - high 5,853 6,041 6,288

Note: Historic emissions obtained from EPA’s Greenhouse Gas Inventory 1990-2013. Carbon Dioxide: Future U.S. carbon dioxide emissions are estimated based on the U.S. Energy Information Administration’s 2015 Annual Energy Outlook (2015 AEO), using the “reference” scenario. The projections account for all federal and state regulations implemented as of the end of October 2014.1 The energy-related CO2 emissions figures obtained from the 2015 AEO are adjusted upward to obtain a rough estimate of total CO2 emissions. We use a 1.03 adjustment factor, which roughly represents the historic ratio between total and energy-related CO2 emissions in the United States. CH4, N2O, HFCs, PFCs, and SF6: Projected U.S. emissions of the remaining five gases are taken from the Second U.S. Biennial Report to the UNFCCC and represent the “current policies” scenario.2 These

1 U.S. Energy Information Administration, 2015. Annual Energy Outlook. 2 U.S. Department of State, 2016. U.S. Second Biennial Report. Available at: http://unfccc.int/files/national_reports/biennial_reports_and_iar/submitted_biennial_reports/application/pdf/2016_second_biennial_report_of_the_united_states_.pdf.

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estimates have been developed by the U.S. Environmental Protection Agency and take into account policies under implementation as of mid-2015. Land sinks: The volume of CO2 removals by U.S. land sinks, particularly forests, is the largest source of uncertainty in future GHG emissions. Historically, this figure has been significant—for example, land sinks offset approximately 15% of total emissions in each of the past five years. Although it is possible that U.S. forests will continue this high rate of carbon sequestration through 2025 and beyond, some studies now indicate that the CO2 absorption rate may begin to decline due to increased forest disturbances (e.g., drought, wildfires and the spread of diseases), slower forest growth, and other factors.3 To account for this variability, the Second Biennial Report provides both a low and high carbon sequestration figure. Both are including in our calculations. Abatement potential: Emissions reductions from Executive Branch actions The following sections detail the series of regulations that are likely to help the United States meet its 2025 emissions mitigation target. This set of programs and policies represents actions that have either been finalized, proposed or announced as of December 2015. Potential reductions are obtained from analyses that accompany the publication of each proposal or final regulation, most often the Executive Branch’s formal regulatory impact analysis but also sometimes respected independent analysis. It is important to note that this analysis is limited only to actions that the Administration has publicly announced. It does not represent the suite of what is possible—but not yet proposed—under existing Executive Branch authority. Moreover, it examines federal regulatory action only. Further reductions are achievable through various sub-national and voluntary programs; however, these are excluded because their additionality and expected impact is difficult to estimate.

3 Tang, J., et al. (2014). Steeper declines in forest photosynthesis than respiration explain age-driven decreases in forest growth. Proceedings of the National Academy of Sciences, 201320761.

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Table 3. New and proposed policies and their potential GHG impact (a)(c) Status 2020 2025 2030 Electricity production Clean Power Plan Finalized -216 -399 -533 Ozone regulations (GHG co-benefits) Finalized +50 -14 -103 Transport CAFE standards for medium/heavy-duty trucks post-MY2018 Proposed 0 -37 -82 Tier 3 vehicle emissions and fuel standards (GHG co-benefits) Finalized -0.8 -1.7 -2.7 Buildings and appliances Strengthened commercial building codes Finalized -10 -19 -27 Efficiency standards for federal buildings Finalized -0.3 -0.5 -0.8 Efficiency standards for electric motors Finalized -4 -8 -12 Efficiency standards for commercial clothes washers Finalized -0.05 -0.12 -0.2 Efficiency standards for florescent and incandescent lamps Finalized -4 -9 -13 Efficiency standards for automatic commercial ice makers Finalized -0.2 -0.4 -0.6 Efficiency standards for commercial air conditioners Finalized -2 -8 -13 Efficiency standards for ceiling fan light kits Finalized -0.1 -0.3 -0.5 Efficiency standards for water pumps Finalized -0.05 -0.3 -0.5 Efficiency standards for residential dishwashers Proposed -0.4 -1 -3 Efficiency standards for SPVAC and SPVHP (industry) Proposed -0.1 -0.2 -0.4 Efficiency standards for hearth products Proposed 0 -1 -3 Efficiency standards for commercial furnaces (industry) Proposed -0.2 -0.5 -0.8 Efficiency standards for residential furnaces Proposed -0.6 -1.2 Efficiency standards for residential conventional ovens Proposed -0.2 -0.8 -1 Efficiency standards for residential dehumidifiers Proposed -0.2 -0.6 -1 Efficiency standards for battery chargers Proposed -0.1 -0.4 -0.7 Efficiency standards for ceiling fans Proposed -0.2 -0.8 -1.5 Methane emissions Oil and gas sector Low: Performance standards for new oil and gas facilities Proposed -4 -9 -14

Standards to reduce venting/flaring on public lands Planned ? ? ? High: Targeted (40-45% below 2012 levels) (b) Discussed -105 -105 Updated standards for landfills Proposed -11 -12 -13 HFCs Low: SNAP program Refrigerant Management Requirements

Finalized Proposed

-29 -8

-60 -8

-92 -8

High: Amendment to the Montreal Protocol Discussed -87 -160 -224 Total - low -240 -592 -928 Total - high -365 -762 -1,124

(a) Annual figures reflect potential reductions of GHG emissions below BAU in MMtCO2-eq.

(b) For methane released from the oil and gas sector, the 2020 estimate is based on the White House strategy to reduce methane emissions while the 2025 estimate is based on the U.S. goal to reduce emissions by 45% below 2012 levels by 2025. More accurate potential reductions from policy will be included once specific regulations are proposed and finalized. (c) These calculations are simplified and do not account for interdependencies and feedback loops between sectors.

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Electricity generation Clean Power Plan: Finalized in August 2015, the Clean Power Plan (CPP) imposes the first binding limits on carbon pollution from existing power plants, the single largest source of greenhouse gas emissions in the U.S. economy. The rule, which forms the cornerstone of the Obama administration’s climate agenda, aims to cut emissions from the sector by approximately 32% from 2005 levels by 2030. Of all policies considered in this analysis, the CPP represents the largest emissions reduction potential and its successful implementation is key to not only achieving the U.S.’s 2025 emissions mitigation target, but even the 2020 Copenhagen pledge. Although there is a consensus that the plan’s overall potential impact is significant, its specific emissions mitigation figures are somewhat difficult to define. In the final rule’s Regulatory Impact Analysis, the EPA noted that the plan would reduce CO2 emissions by 64 million metric tons (MMTCO2) below BAU in 2020, 210 MMTCO2 in 2025 and 376 MMTCO2 in 2030.4 However, the BAU pathway used by the EPA to calculate this impact are substantially different from the emissions projections cited in the draft rule, as well as those arrived at by the EIA—the numbers we use here to build our reference case scenario. To address this issue, and make the CPP case comparable with our broader emissions projections, we use EIA’s rather than EPA’s figures for future power sector emissions. We believe that this is reasonable, particularly if states adopt mass-based targets as many are expected to do, because these will essentially serve as a cap on emissions and will not be influenced by a higher or lower BAU. In other words, states will still have to achieve the same absolute emissions levels regardless of how agencies change their projections. Using this logic, we obtain reductions of 212, 399, and 533 MMTCO2e in 2020, 2025, and 2030, respectively. Ozone regulations (GHG co-benefits): In early October, the EPA finalized new national ozone standards, lowering the allowable ozone concentration limit from 75 to 70 parts per billion (ppb). The final standards represent the upper limit of the range proposed in the draft rule last November, a figure that environmental and health groups have blasted as too weak and opponents consider completely unnecessary. The EPA is required to reexamine the standards every five years, although it is not obligated to change them. While the rule does not target GHG emissions as a primary objective, it has important climate co- benefits. Specifically, lowering the concentration of ground-level ozone is expected to increase the ability of U.S. forests to absorb carbon dioxide, essentially by making forests healthier. In an earlier analysis, we estimated the rule’s impact to be over 300 million tons of added sequestration in 2030, based on a 65 ppb limit. The impact of a 70 ppb limit is a much smaller – albeit still significant – 100 million tons. The benefits, however, are not expected to accrue until after the middle of the next decade because of the time it takes for forests to gain biomass. The rule’s impact on carbon sinks is therefore negligible in 2020. We calculate the regulation’s additional sequestration potential in 2025 by plotting the data

4 Converted from short tons. EPA, 2015. Clean Power Plan Regulatory Impact Analysis. Available at: http://www2.epa.gov/sites/production/files/2015-08/documents/cpp-final-rule-ria.pdf.

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provided in its Regulatory Impact Analysis for added carbon storage in 2020, 2030, and 2040 and extrapolating the in-between figures based on the overall trend. Transportation CAFE standards for medium- and heavy-duty trucks post-MY2018: In June of this year, the EPA and the National Highway Traffic Safety Administration (NHTSA) proposed new corporate average fuel economy (CAFE) standards for medium- and heavy-duty vehicles built in model years 2019-2027. The move, which builds on the CAFE requirements for trucks MY2014-2018 issued in 2011, will require manufacturers to increase vehicle fuel efficiency by about a third and will reduce carbon pollution by about 1 billion metric tons over the lifetime of the vehicles sold under the program.5 We estimate possible emissions reductions from the rule by plotting the total reduction figures provided in the Regulatory Impact Analysis for 2025, 2035, and 20506 and fitting a trendline through the points. The resulting emissions savings amount to 36.6 MMTCO2-eq in 2025 and 81.5 MMTCO2-eq in 2030. Because the regulation applies to trucks manufactured in 2019 and beyond, its impact on 2020 emissions is negligible. Tier 3 vehicle emissions and fuel standards (GHG co-benefits): In April 2014, EPA finalized updated standards for tailpipe and evaporative emissions from passenger cars and trucks. This rule will be implemented beginning with vehicles MY2017, and its principle purpose is to set more stringent emissions standards for local pollutants (NOx, particulate matter and other air toxins) and reduce the sulfur content of gasoline. However, it is expected to have some GHG co-benefits. In particular, studies of stricter emissions and sulfur content requirements have demonstrated associated reductions in methane and nitrous oxide emissions.7 Although these reductions are expected to be somewhat counterbalanced by an increase in CO2 emissions – as reducing gasoline’s sulfur content will require additional refining – the program is still expected to results in a net decrease in CO2-eq emissions. We obtained the overall GHG emissions impact in 2020, 2025 and 2030 from the rules’ Regulatory Impact Analysis, which includes potential reductions of 0.4 and 2.7 MMTCO2-eq in 2018 and 2030, respectively. Figures for 2020 and 2025 are extrapolated based on an assumed linear trend between the start and end year of the EPA estimate. Buildings and appliances Strengthened commercial building codes: In September 2014, the Department of Energy (DOE) affirmed that the new industry commercial building code provides greater energy efficiency savings than previous standards. The updated code will reduce energy use and cut carbon dioxide emissions by 230

5 EPA, 2015. Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium and Heavy-Duty Engines and Vehicles: Phase 2. Available at: http://www.regulations.gov/#!documentDetail;D=EPA-HQ-OAR-2014-0827-0002. 6 EPA and NHTSA, 2015. Proposed Rulemaking for Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles: Phase 2. Regulatory Impact Analysis. Available at: http://www.epa.gov/otaq/climate/documents/420d15900.pdf. 7 EPA, 2014. Control of Air Pollution from Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards Final Rule. Regulatory Impact Analysis. Available at: http://www.epa.gov/otaq/documents/tier3/420r14005.pdf.

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MMTCO2 through 2030.8 To estimate the annual impact of the policy, we assumed a linear incremental increase in year-to-year emissions reductions for a total of 230 million tons over the next 15 years. Energy efficiency standards for new federal buildings: In November 2015, DOE released final energy efficiency standards for newly constructed federal commercial and multi-family high-rise residential buildings whose design and construction begins after November 6, 2016. The rue is expected to avoid a modest but important 6.2 MMTCO2 through 2030.9 We estimate the annual GHG impact of the regulation by extrapolating a linear pathway from zero avoided emissions in 2015 to a cumulative 6.2 million tons in 2030. The emissions avoided in 2020, 2025 and 2030 for this and all other policies are provided in Table 3. New standards for electric motors: In May 2014, DOE issued final energy conservation standards for electric motors sold in 2016 and later. The new standards are expected to result in cumulative emissions reductions of 96 Mt of CO2 by 2030. The annual GHG impact of the policy is estimated using a linear incremental increase in year-to-year emissions reductions discussed above. New standards for commercial washers: In December 2014, DOE issued final energy conservation standards for commercial clothes washers sold in 2018 and later. The new standard will result in relatively modest CO2 emissions reductions, equivalent to approximately 1.2 million tons through 2030.10 To estimate annual emissions reductions, we again assumed a linear incremental increase in year-to-year cuts for a total of 1.2 million tons over the next 12 years. Additional GHG benefits in terms of N2O and CH4 emissions reductions were only provided as a cumulative figure over the life of the appliances. We estimated the annual emissions reductions of these gases through 2030 by multiplying the annual CO2 figure by the ratio of the lifetime N2O and CH4 to CO2 emissions reductions. New standards for service florescent and incandescent lamps: Also in December 2014, DOE issued final energy conservation standards for service florescent and incandescent reflector lamps sold in 2017 and later. The rule is projected to reduce CO2 emissions by 90 Mt through 2030 and result in additional reductions of CH4 and N2O emissions.11 The annual GHG impact of the policy is estimated using a linear incremental increase in year-to-year emissions reductions discussed above. New standards for automatic commercial ice makers: Rounding out the December 2014 announcements were standards for automatic commercial ice makers, also issued by the DOE. The policy, which applies to models sold in 2018 and later, is expected to reduce CO2 emissions by a relatively modest 4 Mt through 2030 and lower CH4 and N2O emissions by a nominal amount.12 As above, annual GHG impact of the policy is estimated using a linear incremental increase in year-to-year emissions reductions.

8 White House, 2014. Press Release. White House Announces Executive Actions and Commitments from Across the Country to Advance Solar Deployment and Energy Efficiency. Available at: http://www.whitehouse.gov/the-press-office/2014/09/18/fact-sheet-white-house-announces-executive-actions-and-commitments-acros. 9 DOE, 2015. Energy Efficiency Standards for New Federal Commercial and Multi-Family High-Rise Residential Buildings. Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0047-0001. 10 DOE, 2014. Energy Conservation Standards for Commercial Clothes Washers. Available at: http://energy.gov/sites/prod/files/2014/12/f19/commercial_clothes_washers_final_rule_1.pdf. 11 DOE, 2014. Energy Conservation Program: Energy Conservation Standards for General Service Fluorescent Lamps and Incandescent Reflector Lamps. Available at: http://energy.gov/sites/prod/files/2014/12/f19/gsfl_final_rule.pdf. 12 DOE, 2014. Energy Conservation Program: Energy Conservation Standards for Automatic Commercial Ice Makers. Available at: http://energy.gov/sites/prod/files/2014/12/f19/acim_final_rule.pdf.

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New standards for commercial air conditioners: Energy efficiency advocates celebrated an important win in June 2015 with the release of an agreement on strengthened efficiency standards for commercial air conditioners and furnaces. The result of formal negotiations led by the U.S. Department of Energy (DOE) that included representatives from industry and the environmental community, the new rules will require efficiency improvements of 10 and 25-30% by 2018 and 2023, respectively, for commercial air conditions compared to today’s models. Commercial furnaces will be required to reach 81-82% thermal efficiency by 2023. In addition to representing a consensus reached by all stakeholders—a substantial achievement in its own right—the agreement will also lead to the largest energy savings from a single piece of efficiency rulemaking in DOE’s history. The updated standards are expected to reduce carbon dioxide emissions by 873 million metric tons (MT) over the standards’ lifetime as well as some smaller cuts in N2O and CH4 emissions.13 By way of comparison, the average CO2 emissions reductions from standards proposed and finalized over the past year is approximately 100 million MT, with a range of just under 5 to 395 million MT. The rule is expected to avoid 77 MMTCO2 through 2030. The annual GHG impact of the policy is estimated using a linear incremental increase in year-to-year emissions reductions discussed above. Efficiency standards for ceiling fan light kits: In December 2015, DOE finalized energy conservation standards for ceiling fan light kits sold in 2019 and beyond. The standards are expected to reduce CO2 emissions by a relatively modest 3.1 million metric tons through 2030 and decrease emissions of methane and N2O by a little more than 200 thousand tons (CO2-equivalent).14 As above, to estimate annual emissions reductions, we assumed a linear incremental increase in year-to-year cuts for a total of 3.1 million tons over the next 11 years. Reductions in CH4 and N2O were calculated using the process described previously. The resulting emissions reductions are 0.3 and 0.5 MMTCO2-eq in 2025 and 2030, respectively. Reductions in 2020 are negligible. Efficiency standards for water pumps: In a spurt of early 2016 efficiency rule finalizations, DOE issued final energy conservation standards for water pumps. The rule, which establishes the first national efficiency standards for commercial and industrial pumps and will impact those manufactured in 2020 and later, is expected to reduce CO2 emissions by 2.7 MMT through 2030 and contribute to relatively minor reductions of CH4 and N2O.15 Efficiency standards for residential dishwashers: In December 2014, DOE also issued proposed new energy conservation standards for residential dishwashers sold in 2019 and later. If adopted, the new standards could reduce CO2 emissions by 14.6 million tons, and results in smaller cuts to N2O and CH4 emissions, by 2030.16 Again, to estimate annual emissions reductions, we assumed a linear incremental increase in year-to-year cuts for a total of 14.6 million tons over the next 12 years. We estimate the additional N2O and CH4 emissions reductions using the gas ratio to CO2 process described above. 13 DOE, 2015. Energy Conservation Program for Certain Industrial Equipment: Energy Conservation Standards for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment and Commercial Warm Air Furnaces. Available at: http://energy.gov/sites/prod/files/2015/12/f27/CUAC-CUHP%20CWAF%20Direct%20Final%20Rule.pdf. 14 DOE, 2015. Energy Conservation Standards for Ceiling Fan Light Kits. Available at: http://energy.gov/sites/prod/files/2015/06/f23/cflk_nopr.pdf. 15 DOE, 2015. Energy Conservation Program: Energy Conservation Standards for Pumps. Available at: http://energy.gov/sites/prod/files/2015/12/f28/Pumps%20ECS%20Final%20Rule.pdf. 16 DOE, 2014. Energy Conservation Standards for Residential Dishwashers. Available at: http://energy.gov/sites/prod/files/2014/12/f19/dishwashers_nopr.pdf.

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Efficiency standards for SPVAC and SPVHP: In December 2014, the DOE proposed stronger energy conservation standards for vertical air conditioners and heat pumps manufactured for industrial use. The standards, which will affect equipment manufacture beginning in 2019, are expected to avoid a cumulative 2.2 MMTCO2 through 203017, as well as nominal quantities of CH4 and N2O. Annual emissions reductions of all gases were estimated using the methodology detailed above. Efficiency standards for hearth products: In February 2015, the DOE proposed new energy conservation standards for hearth products—gas-fueled fireplaces, gas log sets, freestanding stoves—sold in 2021 and later. If adopted as proposed, the new rules could reduce CO2 and CH4 emissions by over 11 and 3 million tons, respectively, by 2030.18 Efficiency standards for commercial warm air furnaces (industry): Also in February 2015, DOE proposed stricter energy conservation standards for oil- and gas-fired warm air furnaces used in industry. Applicable to equipment produced 2018 and later, the new standards are expected to avoid a total of 4.4 million tons of CO2 emissions and 1.1 MMTCO2e of methane emissions through 2030.19 Efficiency standards for residential furnaces: In March 2015, DOE issued a proposal to update the energy conservation standards for residential gas furnaces sold in 2021 and later. Last revised in 2007, the current proposal would set the minimum efficiency level at 92%—a significant jump from the current 80% floor. If finalized as proposed, the standards would reduce carbon and methane emissions by 4.4 and 2.4 million tons of CO2e, respectively, through 2030.20 Nitrous oxide reductions are negligible. Efficiency standards for residential conventional ovens: In June 2015, DOE issued proposed energy conservation standards for residential conventional ovens sold in 2019 and later. The rule is expected to reduce CO2 emissions by 7.5 million metric tons through 2030 and result in additional modest reductions of CH4 and N2O.21 Annual reductions amount to about 0.2, 0.8, and 1.3 MMTCO2-eq in 2020, 2025, and 2030, respectively. Efficiency standards for residential dehumidifiers: Rounding out a busy month in rulemaking for the DOE are proposed energy conservation standards for residential dehumidifiers sold during or after 2019. If finalized as proposed, the rule is expected to reduce CO2 emissions by nearly 6 million metric tons through 2030 and result in small additional decreases in CH4 and N2O.22 Efficiency standards for battery chargers: In August 2015, DOE proposed revised energy conservation standards for battery chargers sold beginning in 2018. When finalized, rule is expected to

17 DOE, 2014. Energy Conservation Programs for Certain Industrial Equipment: Energy Conservation Standards for Commercial Warm Air Furnaces. Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0021-0013. 18 DOE, 2015. Energy Conservation Program for Consumer Products: Energy Conservation Standards for Hearth Products. Available at: http://energy.gov/sites/prod/files/2015/01/f19/Hearth%20Products_NOPR.pdf. 19 DOE, 2015. Energy Conservation Programs for Certain Industrial Equipment: Energy Conservation Standards for Commercial Warm Air Furnaces. Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2013-BT-STD-0021-0013. 20 DOE, 2015. Energy Conservation Program for Consumer Products: Energy Conservation Standards for Residential Furnaces. Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2014-BT-STD-0031-0032. 21 DOE, 2015. Energy Conservation Standards for Residential Conventional Ovens. Available at: http://energy.gov/sites/prod/files/2015/06/f22/residential_ovens_nopr.pdf. 22 DOE, 2015. Energy Conservation Standards for Residential Dehumidifiers. Available at: http://www.regulations.gov/#!documentDetail;D=EERE-2012-BT-STD-0027-0031

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reduce CO2 emissions by 4.3 million metric tons through 2030 and bring down CH4 and N2O emissions by a small sum.23 Efficiency standards for ceiling fans: Toward the end of 2015, DOE proposed updated energy conservation standards for ceiling fans sold beginning in 2019. This comes on the heels of an attempt by House Republicans to block additional revisions to the standards through the FY2016 appropriations process. [The final appropriations bill did not include this restriction.] If finalized as proposed, the rule is expected to reduce CO2 emissions by a cumulative 8.5 million tons through 2030.24 CH4 and N2O emissions are small. Methane regulations Targeted methane emissions reductions from oil and gas: In January of 2015, the Obama administration released an overarching goal to reduce methane emissions from the oil and gas sector by 40-45% below 2012 levels by 2025.25 Because detailed information on the actions that will be used to meet this target is not yet available—the only rulemaking proposed thus far has been the emissions standards for new facilities, discussed below—we use the goal itself to calculate potential reductions in the optimistic scenario. (The pessimistic pathway only counts abatement from policies already introduced.) Since emissions from oil and gas accounted for approximately 27% of total methane released in the U.S. in 2012, reaching the upper end of the target would result in reduction of around 105 MMTCO2-eq in 2025. We assume at least the same level of reductions in 2030. This analysis will be updated as additional information becomes available, including the Bureau of Land Management’s proposal to limit venting and flaring on public lands, expected to be released this year. Emissions standards for new oil and gas production facilities: In August 2015, the EPA proposed updated performance standards for the oil and gas sector to limit emissions of methane and volatile organic compounds. The standards, which apply only to new and modified production facilities, extend a 2012 rule requiring emissions capture at natural gas production facilities to hydraulically fractured oil wells. The proposal also seeks to require downstream emissions reductions, covering natural gas transmissions and storage facilities. According to EPA estimates, the rule will decrease methane emissions by 3.8-4 MMTCO2-eq in 2020 and 7.7-9 MMTCO2-eq in 2025. We use the higher number in each of the ranges for our analysis of abatement from actions in each of these two years. Because the agency does not estimate emissions reductions for 2030, we simply assume that the increase in mitigation is the same as that observed between 2020 and 2025. The 2030 total abatement is then 14 MMTCO2-eq. Emissions standards for landfills: In 2014, the EPA issued a proposed update to the emissions guidelines for municipal solid waste landfills, responsible for about a fifth of the U.S. total methane

23 DOE, 2015. Energy Conservation Standards for Battery Chargers. Available at: http://energy.gov/sites/prod/files/2015/08/f25/battery_chargers_snopr.pdf. 24 DOE, 2015. Energy Conservation Program: Energy Conservation Standards for Ceiling Fans. Available at: http://energy.gov/sites/prod/files/2015/12/f27/ceiling%20fans%20nopr_1.pdf. 25 White House, 2015. Press Release. Administration Takes Steps Forward on Climate Action Plan by Announcing Actions to Cut Methane Emissions. Available at: http://www.whitehouse.gov/the-press-office/2015/01/14/fact-sheet-administration-takes-steps-forward-climate-action-plan-anno-1.

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emissions. The proposal sought to establish a new, lower, emissions level at which facilities would be required to capture and control methane and non-methane gases. In the months that followed, public comments and additional data reviews demonstrated that the potential to reduce emissions from landfills was in fact higher than that acknowledged in the initial proposal. Incorporating the new information, EPA released a new, stricter, version of emissions guidelines for existing landfills and issued supplemental new source performance standards for new and modified facilities. If finalized as proposed, the two draft rules are expected to reduce emissions by 11, 12, and 13 MMTCO2-eq in 2020, 2025, and 2030, respectively.26 Additional actions: Coal and agriculture represent two additional methane sources not covered by recent federal regulations. The sectors are not included in our calculations, although several areas of potential progress are detailed below.

! Coal mines: This past May, the Bureau of Land Management (BLM) released pre-proposal notice to gather input on the capture and sale or disposal of waste methane from mines operating on public land. Although the comment period closed in June, BLM has not yet made any indication regarding the release of a proposed rule.

! Agriculture: In August of this year, the U.S. Department of Agriculture (USDA), EPA and the DOE released a Biogas Opportunities Roadmap that outlines voluntary strategies to reduce GHG emissions from the dairy sector. The Roadmap found that deploying an additional 11,000 biogas systems around the country could reduce methane emissions by 4-54 MMTCO2-eq in 2030.27 Because this estimate is based exclusively on voluntary action, it is not included as a separate line item in our analysis.

Hydrofluorocarbons Montreal Protocol: In May of 2014, the United States, Canada, and Mexico submitted an amendment to the Montreal Protocol to phase down the production and consumption of hydrofluorocarbons (HFCs). The proposed schedule sets gradually decreasing allowable emissions limits for the U.S. and other non-article 5 countries equivalent to 90% of baseline28 by 2020, 65% of baseline by 2025 and 30% of baseline by 2030. Although the most recent talks did not produce an international agreement, we calculate the resulting reductions in HFC emissions to illustrate the ceiling of potential emissions cuts. Reductions are measured by subtracting the allowable cap from projected BAU HFC emissions as reported in the U.S. Second Biennial Report to the UNFCCC. This results in emissions savings of approximately 87, 160 and 224 MMTCO2-eq in 2020, 2025 and 2030, respectively.

26 EPA, 2015. Regulatory Impact Analysis for the Proposed Revisions to the Emission Guidelines for Existing Sources and Supplemental Proposed New Source Performance Standards in the Municipal Solid Waste Landfills Sector. Available at: http://www.epa.gov/ttn/atw/landfill/20150810_landfills_ria.pdf. 27 USDA, EPA and DOE, 2014. Biogas Opportunities Roadmap. Available at: http://www.epa.gov/climatechange/Downloads/Biogas-Roadmap.pdf. 28 The baseline is defined as the average of HFC consumption and production in 2008-2010.

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Significant New Alternatives Policy (SNAP) Program: If an amendment to the Montreal Protocol is not adopted successfully, the EPA will still be able to reduce emissions of HFCs through the SNAP program, although these reductions would be relatively modest. The program, which derives its authority from the Clean Air Act, allows the EPA to evaluate and regulate substitutes for harmful ozone-depleting chemicals by limiting the use of the most dangerous pollutants and publishing a list of available alternatives. In August of this year, EPA finalized new rules restricting the use of certain HFCs in sectors where lower-GHG substitutes are available. According to the agency’s estimates, the final rule is expected to reduce the equivalent of 29, 60 and 92 million tons of CO2 compared to business-as-usual.29 The cuts will come primarily from motor vehicle air conditioning, commercial refrigeration, foams, and consumer aerosols. Refrigerant Management Requirements: Proposed by the EPA in October 2015, the rule updates requirements for handling and recycling refrigerants and extends existing mandates, which only apply to ozone-depleting substances, to HFCs. According to EPA estimates, the new requirements will reduce GHG emissions by about 8 MMTCO2-eq annually.30 Because the rule’s mitigation potential is projected through 2025 only, we assume its 2030 impact will be at least equivalent to that expected in 2025. To calculate the possible reductions in HFC emissions, we use either the Montreal Protocol figure (high abatement estimate) or the to expected reduction from the SNAP program and new refrigerant management requirements (low abatement estimate). This reflects the fact that if the international community reaches agreement on the phase-down of HFCs globally, the U.S. will use its authority under SNAP and other programs to begin reducing emissions to the allowable cap. If an agreement is not reached, potential reductions would only reach the levels indicated by existing regulations.31

29 EPA, 2015. Climate Benefits of the SNAP Program Status Change Rule. Available at: http://www.regulations.gov/#!documentDetail;D=EPA-HQ-OAR-2014-0198-0239. 30 EPA, 2015. Technical Support Document. Available at: http://www.regulations.gov/#!documentDetail;D=EPA-HQ-OAR-2015-0453-0004. 31 EPA, 2014. Climate Benefits of the SNAP Program Status Change Rule. Available at: http://www.regulations.gov/#!documentDetail;D=EPA-HQ-OAR-2014-0198-0003.

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Summary of Analysis: Meeting the 2025 target Given the assumptions described above, our analysis shows that final emissions range from about 5,341 Mt to 5,613 Mt in 2020 and approximately 4,987 Mt to 5,449 Mt in 2025 (Figure 1). These are associated with a 13-17% reduction in emissions in 2020 and a 15-23% reduction 2025, both from 2005 levels. In the pessimistic scenario—high emissions and low abatement—the U.S. does not meet either the 2020 or the 2025 goal. In the more optimistic scenario—low emissions and high abatement—the U.S. meets its 2020 emissions reduction target and positions itself within the range of meeting the 2025 pledge, assuming continued White House leadership and a suite of not yet unannounced policies after 2016. Figure 2 shows the expected emissions reductions, by source, in 2025 under the optimistic scenario. Figure 1. Projected emissions relative to targets

Note: The reference case is presented as a range to account for low and high land sinks. The pessimistic scenario represents a worst-case pathway, resulting from a lower ability of U.S. forests to capture carbon combined with low abatement from domestic action. The optimistic scenario represents a best-case path, with high natural carbon sinks and high emissions reductions from domestic action. This analysis shows that there is still a gap between what the existing suite of proposed or finalized policies would achieve, and what President Obama has pledged for 2025. To close the gap, the next U.S. President could pursue a range of additional measures using existing Executive Branch legal authorities. These include existing environmental laws for increasing the adoption and performance of renewable energy technologies, reducing vehicle fuel demand by improving public transit and encouraging carpooling and telecommuting, developing building retrofit and weatherization programs, and further strengthening building and appliance codes, among others.

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On the road to 2025: Where are we now?

The above graphic represents expected emissions reductions in 2025 broken down by the stage of the regulation expected to achieve them.

• Finalized: Finalized policies include already adopted, on-the-books, regulations. These comprise the Clean Power Plan, a suite of new and updated energy efficiency standards for buildings and appliances, the phasedown of HFCs through the SNAP program, and updated ozone standards, which are not aimed at GHG emissions but produce climate co-benefits. Totaling ~519 million MT of CO2eq, finalized policies represent approximately 53% of needed reductions.

• Proposed: Proposed policies include announced regulations with drafts already available for comment. These include a new rule to lower methane emissions from new oil and gas facilities, updated CAFE standards for trucks, and another half-dozen energy efficiency standards. Proposed policies may eventually be adopted in a somewhat different form, which will have an impact on the expected emissions reductions. Amounting to ~73 million MT of CO2eq, proposed policies now account of 7% of total needed action.

• Planned: Planned policies are those that have been announced, but whose drafts have not yet been made available. The most significant of these are additional regulations to limit methane emissions from the oil and gas sector in line with the administrations goal to achieve 40-45%

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reductions by 2025 from 2012 levels. If proposed and implemented as expected, planned policies can reduce GHG emissions by ~78 million MT of CO2eq or 8% of all needed reductions.

• Discussed: Discussed policies include those that are considered necessary and achievable, but that are not yet close to becoming law. This category includes the phasedown of HFCs under the Montreal Protocol. With potential reduction of ~92 million MT of CO2eq, discussed policies represent 9% of all needed reductions.

Conclusion This report demonstrates that the suite of recent and proposed regulations pushed forward by the Obama administration, particularly the Clean Power Plan, could lead to significant reductions in U.S. GHG emissions by 2025. These initiatives could amount to up to 23% below 2005 levels and could potentially fall within striking distance of achieving the U.S. target with enhanced political will for climate action. However, to achieve the U.S. pledge of reducing emissions 26-28% by 2025, the next U.S. President would need to vigorously implement these Obama administration policies as well as propose new emission reduction measures—something that is far from assured given political differences on climate change in the United States. Weak policy implementation combined with lower than expected natural carbon sequestration from U.S. forests and lands could yield emission reductions in the range of only 15% below 2005 levels by 2025—far below the U.S. 2025 pledge. Several factors beyond political will are likely to influence the ability of the United States to meet its 2025 emissions reduction pledge. The volume of CO2 removed by U.S. land sinks, particularly forests, is the largest source of uncertainty in future GHG emissions. Moreover, unpredictable and rapid changes in factors such as prices, production, and energy demand are likely to have a substantial impact on future emissions, as could changes in economic growth compared to projected GDP increases. This variability is not accounted for in this analysis.

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