Energy Policy

Energy Policy

Energy and the Human Development Index

Energy use is correlated with quality of life in many countries. However, improvements in this quality of life (HDI) level off at higher levels of energy consumption.

Definitions

• Gross Domestic Product (GDP)

  • Monetary value of all goods and services created by an economy.

• Per capita GDP (GDP per person)

  • The GDP of an economy divided by the number of persons in that economy.

• Per capita energy use (Joules per person)

• Energy intensity of GDP (Joules per GDP)

Energy and GDP

There is a correlation between energy use and the gross domestic product in countries.

Energy vs GDP by country

US GDP

• 2006

• GDP 14 trillion USD $14 \cdot 10^12$

• Population 300 million

• Energy use 100 Quads

Energy per unit of GDP

We can think of energy intensity as a form of efficiency. How much energy does it take a country to create economic value?

Source: The Economist

Energy per capita

California Electricity Consumption

Tools to affect energy use

How do we make changes to our energy system? Laws, institutions, and markets set the rules for energy usage.

• Cap and Trade

• Carbon Tax

• Mandates

• Renewable Portfolio Standards

• Subsidy

You will use your quantitative skills to assess the impact of these different policy instruments.

The Resource Curse

Experts have observed that discovering petroleum wealth in a country often doesn't lead to better economies or health for the country. This idea is called the resource curse.

Several countries that have oil as a significant fraction of their economics have low ratings for the HDI and democracy.

California

California

• Global Warming Solutions Act of 2006 (AB 32)

  • Reduce GHG emissions to 1990 levels by 2020

  • 1990 was 427 million metric tonnes of CO2 equivalent

How are we doing?

California Air Resources Board

California 2050 goal

• 80% reduction below 1990 levels

How do we achieve this goals?

• What can we do on a county or state level?

Sonoma County

Sonoma County

• Sonoma County Energy Independence Program (SCEIP)

• Property Assessed Clean Energy (PACE)

Sonoma County

• Recently announced PACE Financing Marketplace

• Allows multiple choices of funding for consumers

Property Assessed Clean Energy (PACE)

• Allows loans to be paid back on the property tax bill

• Funded through municipal bonds

• Loan is attached to the property

• Has funded over $68 million dollars in projects

United States

• Clean Air Act 1963

• Clean Water Act 1972

• Energy Independence and Security Act of 2007

Sonoma County Action Plan

• GHG Plan Highlights

• 2005 Action Plan

• 2008 Action Plan

Sonoma County Climate Plan

Climate Protection Campaign

Sonoma County Climate Plan

Climate Protection Campaign

Sonoma State

• What policies could you imagine here at Sonoma State

CSU Policies

• CSU Sustainability Policy

• 2014 CSU Sustainability Report

• STARS Report Campuses

Global Negotiations

Rio Earth Summit, 1992

• Negotiated the United Nations Framework Convention on Climate Change

  (UNFCCC)

Kyoto Protocol, 1997

• Adopted at the 3rd Conference of the Parties (COP 3)

• China and India not required to cut

• US did not ratify the treaty

• Burden of emissions reductions placed on developed countries

Copenhagen Climate Change Conference, 2009

• 15th Conference of the Parties (COP 15)

• Viewed as a disappointment by many

Paris, 2015

• 21st Conference of the Parties (COP 21)

• Goal of limiting average temperature increase to 2 degrees Celsius

  above preindustrial levels

Montreal Protocol, 1987

• International agreement to reduce Chlorofluorocarbons (CFCs) and other

  ozone damaging chemicals

• Provides an example of a world wide emissions reduction treaty

China US Climate Agreement

• Last week, the US and China announced a historic agreement to reduce

  GHG emissions

Discussion

• Read the

  article

• We will then discuss some questions

What are the basic terms of the agreement?

• For the US?

• For China?

Are these terms meaningful?

• How do these compare to existing targets like California AB32?

What difficulties do you anticipate?

• Why would China want to reach this deal

• Why doesn't China want to peak now?

• Why would US want this deal

• Why not?

Direct and Indirect Subsidies

Subsidies are financial benefits to consumers of a product. In the case of energy they can be costs that didn't have to be paid or a direct payment from the government.

Fossil Fuels

• Intangible Drilling Costs Deduction. We provide tax deductions for oil exploration costs.

• Social cost of carbon. These are costs we estimate are borne by the public but are not paid for by fossil fuel companies or consumers.

Solar

• Federal tax credit for solar panel installation

• Renewable electricity production credit

Finance

Some financing or bonds are provided by the government for investment. The lower cost of capital means a lower repayment cost and is a subsidy for the energy project that receives it.

Examples

We want to reduce GHG emissions about 85% by 2050. Sonoma county has a 2015 GHG emission of 3.5 units and a 2050 target of 0.5 units. This reduction will happen over 35 years.

$\delta t = 2050 - 2015 = 35$ $0.5 = 3.5(1-r)^{35}$ $(0.5/3.5)^{1/35} = 1-r$

This works out to about a five percent per year reduction.