Climate Briefs

Managing the Transition to Climate Stabilization
(February 2008)
Recent work by the U.S. Climate Change Science Program (CCSP) developed new emissions scenarios for the major man-made greenhouse gases (GHGs)1. The CCSP report illustrated the effects on the energy system and the economy of various stabilization constraints as well as a no-policy reference case. Follow-on work supported by the Electric Power Research Institute (see Richels et al., 2007) applies one of the three models used for the CCSP analysis, the MERGE model, to explore the sensitivity of the results in two critical dimensions: policy design and the availability and costs of low- to zero-emitting technologies. The results of the follow-on work are summarized here.

Carbon Equivalence
(February 2008)
While carbon dioxide (CO2) is the most widely emitted greenhouse gas (GHG), and the dominant atmospheric forcing agent, other anthropogenic emissions contribute to increased greenhouse forcing. The Kyoto Protocol recognizes five additional GHGs: methane (CH4), nitrous oxide (N2O), and three gases known collectively as the F-gases: hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6). Other gases (for example, chlorofluorocarbons, water vapor, tropospheric ozone) can also act as greenhouse agents, and aerosols such as sulfur dioxide (SO2) can exert negative forcing. The concept of “carbon equivalence” is often invoked as a way to normalize the various gases into interchangeable units. However, the use of this concept is not always straightforward. One critical point is that carbon equivalence is defined differently for comparing emissions than for atmospheric concentrations. Emitted GHGs accumulate in the atmosphere and cause an imbalance in the Earth’s heat balance, known as radiative forcing, leading to surface warming. Ultimately gases must be compared based on contributions to radiative forcing. Gases differ in both the way they accumulate and in their contribution per unit mass to total forcing (known as radiative efficiency). When comparing atmospheric concentrations across gases, only the respective radiative efficiencies are relevant. However, when comparing emissions across gases, the accumulation dynamics and the relative forcing strength must be considered. While emissions comparison has proven to be analytically problematic, especially in a policy setting, equivalence in terms of concentrations is relatively easy to define.

The Role of Greenhouse Gas Emissions Offsets in Global Climate Policy
(February 2008)
The potential role greenhouse gas (GHG) 1 emissions offsets may play in evolving GHG emissions reduction programs is a critical issue to be addressed by U.S. policy makers and others as they grapple with the design and implementation of state, regional and national climate change mitigation programs.

This Climate Brief explains the important role “project-based mechanisms” can play in creating GHG offsets for compliance with mandatory carbon constraints and voluntary efforts to reduce GHG emissions. Offsets offer electric sector companies and other industries a potential way to reduce GHG emissions more cost effectively than reducing emissions internally.

Using Forest Carbon Sequestration to Create Greenhouse Gas Emissions Offsets
(February 2008)
Forest carbon sequestration (FCS) presents electric companies and other entities with potential opportunities to mitigate carbon emissions and generate GHG offsets. Promising approaches to creating FCS-based offsets include afforestation, reforestation, improved forest management and potentially even joint production of wood products and GHG emissions offsets. FCS projects offer many potential benefits, such as:

• Relatively low cost GHG offsets
• Offsets without developing new technology
• Geographic flexibility
• Public image enhancement
• Corporate assets diversification and financial risk hedging.

Updated Scenarios of Greenhouse Gas Emissions and Atmospheric Concentrations
(September 2007)
It has been over a decade since the Intergovernmental Panel on Climate Change (IPCC) published its Special Report on Emissions Scenarios (SRES), and more than five years since the subsequent CO2 stabilization scenarios appeared in the IPCC’s Third Assessment Report. Substantial advances have been made in economic and natural science components of the models used to simulate the various scenarios. The U.S. Climate Change Science Program (CCSP) recently published results of a study designed to enhance the ongoing international process of producing and refining climate-related scenarios and scenario tools. Its report was transmitted to the President and the U.S. Congress in July, 2007. The report and supporting database provide many details of the implications for the U.S. and global economy, with particular focus on the energy sector, for the reference conditions and the four levels of possible atmospheric stabilization.

Economic Analysis of California Climate Initiatives: An Integrated Approach
(September 2007)
California’s climate policy is shaped by several important initiatives that provide the legal framework in which the state’s future greenhouse gas (GHG) emissions will be regulated. California policymakers intentionally provided considerable flexibility about how these goals are to be achieved. As a result, many key aspects of the regulations and programs California will implement to meet these goals remain unclear. Recognizing the high stakes for California’s economy, and the fact that California’s actions have attracted widespread attention and are likely to significantly influence climate policies elsewhere, EPRI undertook a rigorous economic analysis of alternative scenarios for achieving California’s policy objectives.

Interactions of Cost-Containment Measures and Linking of Greenhouse Gas Cap-and-Trade Programs
(September 2007)
The recent proliferation of state, regional, national and international greenhouse gas (GHG) emission trading proposals raises the issues of whether and how to link the various programs to one another. Indeed, the Northeast Regional Greenhouse Gas Initiative (RGGI) program and the evolving California GHG cap-and-trade program have announced their desire to link those programs to the European Union Emissions Trading Scheme (EU-ETS) and the United Nation’s Clean Development Mechanism (CDM). The potential gains from linking are clear—linked programs offer the possibility to reduce GHG emissions at lower overall cost. At the same time, linking raises issues of compatibility among the linked programs and differential impacts on the linked parties.

Electric Technology in a Carbon-Constrained World
(March 2007)
Global climate change is one of the most complex environmental, energy, economic, and political issues confronting society. Greenhouse gas emissions are a by-product of most everyday activity associated with modern life. The challenge of stabilizing "greenhouse gas" (GHG) concentrations in the atmosphere, while limiting the impact of climate policies on economic development is, at its heart, a technology challenge. The electric sector, as a large emitter, will play an important role in any GHG emission mitigation policy. Less recognized is the greatly expanded role electricity will likely play in a carbon-constrained future. Low- and non-emitting electric technologies will displace direct uses of fossil fuels as emissions constraints tighten even with limited technology improvement. Fundamental advances in electric technologies can dramatically reduce the cost of this energy transformation.

The Economic Implications of Carbon Cycle Uncertainty
(February 2007)
The Intergovernmental Panel on Climate Change (IPCC) has concluded that atmospheric concentrations of carbon dioxide (CO2) have increased over the past century due to human activity. Further, significant increases in CO₂ emissions from fossil fuel combustion are expected over the next several decades. About half of the carbon released into the atmosphere is currently taken up by the oceans and terrestrial biosphere. However, the capacities of these uptake mechanisms in the future are unclear. This leads to uncertainty in the future rate of carbon uptake and the amount of emission reductions needed to achieve stabilization of CO₂ concentrations in the atmosphere. Studies to explore the economic implications of stabilizing atmospheric concentrations of CO₂ have traditionally ignored carbon cycle uncertainty. However, the economic cost of stabilizing the concentration of CO₂ is highly dependant on the future rate of carbon uptake by natural processes. This Climate Brief explores how carbon cycle uncertainties affect the economic costs of achieving a given CO₂ concentration target.

Progress in Understanding Natural Climate Variability
(February 2007)
The actual extent of the human contribution to observed global climate change will have significant implications for the cost of climate mitigation. However, quantifying this is not a straight-forward task and uncertainties exist. With uncertainty in the degree of natural climate variability; furthering our understanding and narrowing that uncertainty is critical in discerning the human influence on the observed global climate change.

The Impact of CO₂ Emissions Trading Programs on Wholesale Electricity Prices
(September 2006)
This Climate Brief explores how CO₂ prices theoretically will affect electric prices in competitive markets and compares this with early empirical results from the United Kingdom. The Brief discusses the opportunity cost of emitting CO₂ now faced by EU electric companies, the impact of CO₂ prices on the dispatch of generation units (hydropower, nuclear, coal, and natural gas), the role of coal-fired power plants that are marginal power sources, early market experience in the EU Emissions Trading Scheme, and the effects of increasing natural gas prices.

The Cost of Reducing CO₂ Emissions by Redispatch of Existing Generation
(September 2006)
This Brief describes EPRI research on the cost of reducing CO₂ emissions in an actual system. Researchers applied a simple generation stack model calibrated to 2005 generation costs and power market prices in two regions, one dominated by coal generation and the other by gas generation. Results showed that favoring dispatch of natural gas before coal can provide much larger reductions than generator efficiency improvements but is very expensive at gas price points of $8 or $6 per MMBtu. For the region with coal-dominated generation, a $50 value on CO₂ yields a 77% increase in the wholesale power price but achieves only a 4% reduction in CO₂ for $8 gas (7% for $6 gas). For the region with gas-dominated generation, a $50 value of CO₂ leads to a 42% increase in wholesale power prices and a 10% reduction in CO₂ (20% for $6 gas).

Climate Change Impacts and the Electric Sector
(March 2006)
This Climate Brief summarizes conclusions of EPRI's 2005 workshop "Identifying Research to Help Electric Companies Adapt to Climate Change." The workshop found that, relative to other uncertainties faced by the electric power industry, the uncertainties of the potential impacts of climate change appear to be relatively small. Some electric companies, however, may face significant shifts in demand; some assets, such as hydropower, may be particularly sensitive to potential climate change impacts; and changes in the probability, intensity, or duration of extreme events could have important implications for electric companies. The Brief discusses possible impacts of climate change on load forecasting; generation, transmission, and distribution; and supply planning. Participants suggested that EPRI could play a key coordinating role between the electric sector and various federal climate science initiatives to facilitate identification, development, and dissemination of key climate change impact information that would be useful to the electric sector.

Geologic Storage of Carbon Dioxide: Addressing Potential Barriers to Widespread Use
(December 2005)
This Brief discusses some of the potential barriers to expanded use of geologic storage: 1) leakage - will CO₂ stay in-place and what sorts of hazards may be caused by leaks, 2) cost uncertainty, 3) regulatory uncertainty, 4) potential legal issues, and 5) public acceptance. For each of these issues, this Climate Brief provides an overview of key considerations and discusses what EPRI is doing to provide insight and resolution.

Moving Beyond Concentrations: The Challenge of Limiting Temperature Change
(December 2005)
To better understand the link between human activities and any resultant climate impacts, we must first understand the causal chain between the two, i.e., the relationship between human activities, emissions, concentrations, radiative forcing, temperature, climate, and impacts. This is important because mitigation will require fundamental changes in the way we produce, transform, and use energy; and how we go about making these changes will, in large part, determine the price tag for dealing with climate change. Unfortunately, the current policy focus on concentrations does not go far enough to allow policy makers a clear impression of the impacts of their actions. Shifting the focus further down the causal chain to temperature provides much more information that is crucial for policy making. This Climate Brief examines the importance of moving to a temperature focus and then explores the role of timing and technology in meeting a temperature cap.

Key Lessons from Early Experience with the European Union Greenhouse Gas Emissions Trading Scheme
(September 2005)
On January 1, 2005, the European Union launched the world's first multi-national greenhouse gas emissions trading system. Energy companies have been the dominant participants in the system, as both buyers and sellers. This Brief summarizes the system and its operation to date. Useful preliminary lessons learned from this EU experience include: provide clarity, consistency, and adequate lead time; cover all sectors and gases; include compliance flexibility; allow intertemporal banking and borrowing; encourage linking of programs; and carefully consider the incentives that allocations create.

Interactions of Climate Change and Air Quality
(September 2005)
In April 2005, EPRI convened a workshop of senior scientists with a broad range of expertise to recommend a research agenda on the interactions of climate change and air quality. Based on the workshop, EPRI identified the following areas as those in which EPRI research could make a critical difference: applying global-to-regional-scale models under a wider range of assumptions to explore the sensitivity of the impact of global climate change on air quality; conducting a comprehensive investigation of the impact on health, air quality, and global warming from reducing reflecting aerosols, and evaluating the policy costs and environmental benefits of this strategy; supporting application and enhancement of global climate models, with the goal of replicating observed changes in key air quality variables over the last 30 years; investigating the chemical cycling of methane and other non-CO₂ GHGs, and exploring their inclusion in combined air-quality/climate-change management strategies; and supporting a common database for distribution of and access to air quality and climate data compiled from different networks and studies.

Country Specific Model for Intertemporal Climate (COSMIC 2)
(September 2005)
COSMIC 2 provides climate change impact modelers, policy analysts, and others with a flexible system that can produce a full range of dynamic, country-specific climate-change scenarios. The model was developed by Michael Schlesinger of the University of Illinois at Urbana-Champaign and EPRI's Larry Williams. It was designed to expand the use of integrated assessment modeling for addressing the potential impacts of climate change by removing the need to run expensive supercomputer climate models.

The Costs of Key Electric Sector Greenhouse Gas Reduction Actions
(February 2005)
Provides a description of results from recent case studies estimating the "levelized cost" of different actions that electric companies potentially can implement to reduce their GHG emissions.

What Can Electric Companies do to Reduce CO₂ Emissions?
(February 2005)
Describes key actions electric companies potentially can take to reduce their GHG emissions and how these actions compare in terms of their potential yield of GHG emissions reductions.

Using Discounting to Analyze CO₂ Emission Reduction Actions
(February 2005)
Introduces several advanced concepts in financial discounting, including discounting expected CO₂ emissions reductions and using risk-adjusted discount rates, that make it possible to compare directly the cost-effectiveness of different GHG reduction actions.

Revenue Recycling and the Cost of Climate Policy
(January 2005)
Examines the potential for revenue recycling to reduce the cost of climate policy, reviews key economic and political conditions necessary for potential cost reductions to be realized, and suggests key implications for climate policymaking.

Upstream and Downstream Approaches to Carbon Dioxide Regulation
(January 2005)
Discusses the economic and practical implications of adopting a traditional "downstream" compliance point for limiting CO₂ emissions versus an "upstream" compliance approach that targets carbon content of fuels.

The Impact of Learning-By-Doing on Emissions Abatement
(December 2004)
Analyzes the effects of "learning-by-doing," assuming that learning costs decline with experience in technology implementation.

Comparing Projections of the Global Market Impacts of Climate Change
(December 2004)
Discusses the results of research using five Atmosphere-Ocean General Circulation Models to provide climate-change projections used by the Global Impact Model to calculate market-based impacts of climate change for every country in the world.

Regional U.S. Economic Impacts of Global Climate Change
(December 2004)
Discusses research suggesting that climate change could result in substantial regional shifts in economic activity in the United States.

A Climate Contingency Roadmap for the U.S. Electric Sector: Phase I Status Report
(August 2003)
Participants at EPRI's 2002 Summer Seminar identified global climate change as a crucial issue for the electric sector, and encouraged EPRI to examine options the electric sector might pursue in response. With the concurrence of the EPRI Board of Directors, staff developed a Climate Contingency Roadmap, designed to identify key elements of the relationship between climate change and the U.S. electric sector, and to elucidate the measures, or combination of measures, that might be needed to reach a range of greenhouse gas concentration targets.

U.S. Rejection of the Kyoto Protocol: The Impact on Compliance Costs
(December 2001)
Summarizes a recent study by Alan Manne of Stanford University and Richard Richels of EPRI that examines how U.S. nonratification is likely to affect compliance costs for Annex B countries.

What's Wrong with Global Warming Potentials?
(July 2001)
The Kyoto Protocol permits countries to take a multi-gas approach when meeting their emission reductions obligations. This requires making trade-offs among the six radiatively active greenhouse gases included in the Protocol. The Intergovernmental Panel on Climate Change has suggested global warming potentials (GWPs) for this purpose. As pointed out by a number of researchers, however, GWPs have serious limitations: they take into account neither damages nor abatement costs, and are completely arbitrary in their choice of time horizon for calculating cumulative radiative forcing.

The Potential Health Impacts of Climate Variability and Change for the United States
(December 2000)
Provides a synopsis of the results of the Global Change Research Program's 1990 review of potential impacts that projected changes in climate might have on human health.

Climate Change and Infectious Diseases
(November 2000)
Outlines the fundamental issues related to climate change and infectious diseases, with the hope that a more complete understanding of this important issue will be gained.

Costs of the Kyoto Protocol to the United States: Implications of a Multi-Gas Strategy
(October 2000)
Recent research sponsored in part by EPRI has advanced the state-of-the-art so that the other greenhouse gases included in the Kyoto Protocol can now be included in policy analyses. This Climate Brief summarizes the results of such an analysis for the Unites States.

Abrupt Climate Change - The Evidence from Ice Cores
(October 2000)
Explores the evidence recorded in ice cores, as presented at an EPRI seminar by Dr. Richard Alley, professor of Geosciences at Pennsylvania State University.

The Economic Costs of the Kyoto Protocol
(March 1999)
Summarizes a recent EPRI-sponsored study that examined the potential economic costs of the Kyoto Protocol. The study was conducted by Alan Manne of Stanford University and Richard Richels of EPRI.

The Kyoto Protocol in the Context of the Long-Term Goals of the UN Framework Convention on Climate Change
(March 1999)
Summarizes some key findings of a recent study by Alan Manne of Stanford University and Richard Richels of EPRI on the Kyoto Protocol in the context of a long-term carbon dioxide stabilization objective.

The Need for a Global Energy Technology Strategy
(March 1999)
Explores the influence of energy technology development on the potential costs of stabilizing atmospheric carbon dioxide concentrations.

Trends in U.S. Extreme Weather Impacts
(May 1998)
Summarizes a recent analysis performed by Dr. Roger A. Pielke, Jr. of the National Center for Atmospheric Research on extreme weather impacts in the United States.

Insurance Claims as an Indicator of Global Climate Change
(May 1998)
Recent increases in storm-related insurance losses have resulted in a perception that there has been an increase in storm activity triggered by global climate change. This Climate Brief provides a an assessment of the validity of this perception performed by Dr. Stanley A. Changnon of the University of Illinois.

Trends in Weather and Climate Extremes
(May 1998)
A number of recent investigations have explored whether there is a significant trend in the incidence of extreme events. This Climate Brief discusses a recent synthesis of data prepared for EPRI by Kr. Kenneth Kunkel (Illinois State Water Survey) on North American trends in climate and weather extremes.

Comparing Results of Climate Predictions
(May 1998)
While general circulation models (GCMs) have become increasingly sophisticated, they remain subject to considerable uncertainty. Because researchers have used different approaches to model the complex ocean-land-atmosphere system, model projections can vary substantially. To address this problem, the Model Evaluation Consortium for Climate Assessment sponsored an inter-comparison of the climate changes calculated by several GCMs.

Overview of Climate Change Market Impacts in the United States
(May 1998)
Summarizes key results of EPRI research on the potential effects of climate change on market-based resources in the U.S. economy.

Impacts of a Carbon Tax on U.S. Consumers
(May 1998)
Under sponsorship of EPRI and other public and private organizations, Stanford University's Energy Modeling Forum employed a variety of economic simulation models to explore the costs of climate change policy options.

Regional Impacts of a U.S. Carbon Tax
(May 1998)
An important question for U.S. policymakers is how climate change policy proposals would affect different regions of the country. A study conducted for EPRI by Charles River Associates and DRI/McGraw-Hill provides valuable insights to this question.

The Value of "Where and When" Flexibility
(May 1998)
The reduction of the costs of an AOSIS-like proposal while still achieving substantial reductions in greenhouse gas emissions can be attained by allowing flexibility as to where and when emissions are reduced. Indeed, flexibility can reduce costs by 90 percent, potentially saving the international community trillions of dollars in mitigation costs.

The Role of Developing Countries in Stabilizing Atmospheric CO₂ Concentrations
(May 1998)
International negotiations aimed at stabilizing atmospheric carbon dioxide levels have focused mainly on near-term actions in developed countries. However, developing countries need to play a significant role as well because: (1) they will account for the major share of anthropogenic CO₂ emissions over the next century; (2) they present opportunities for cost-effective emission reductions; and (3) exclusion of developing countries from reduction requirements will not shield them from economic losses.

The Kyoto Protocol: A Summary of Key Issues
(May 1998)
Provides a summary of the key provisions of the Kyoto Protocol, which specifies targets and timetables for Annex I countries to reduce greenhouse gas emissions.

The United Nations Framework Convention on Climate Change
(May 1998)
Provides a description of the U.N. Framework Convention on Climate Change that was signed by 154 nations at the 1992 Rio "Earth Summit." Following ratification by the fiftieth signatory, it entered into force in 1994.This international treaty sets into motion the most sweeping environmental policy-making process to-date.