Each week, we’re compiling the most relevant news stories from diverse sources online, connecting the latest environmental and energy economics research to global current events, real-time public discourse, and policy decisions. Here are some questions we’re asking and addressing with our research chops this week:
What will the future of energy use look like if world leaders do not implement new climate policy quickly enough?
Leaders of seven of the world’s largest economies will converge this weekend in the United Kingdom for a three-day G7 summit. Climate will be a top item on the agenda prior to the long-delayed COP26 gathering this year, where Paris Agreement signatories will commit to more ambitious emissions reduction goals. Agreements already have been forged: in preliminary meetings, environmental officials have pledged to stop financing coal projects and end direct government support for carbon-intensive fossil fuels, while top finance officials have agreed to collectively pressure companies to publicly disclose their exposure to climate risks. But, as a recent report from the International Energy Agency has made clear, these countries’ current climate commitments will not be enough to avert catastrophic outcomes, and a new level of urgency is necessary. With infrastructure talks in the United States in flux and other leading nations likewise struggling to institute measures that will curb emissions, the future trajectory of global climate change mitigation efforts hangs in the balance.
This week, RFF released its annual Global Energy Outlook report, which standardizes projections of future energy use from a variety of data sources. Some of these projections assume that few new climate policies will be implemented, while other more ambitious scenarios show how energy use would shift if global leaders enact policies to limit global temperature increases to below 1.5 or 2 degrees Celsius. The energy intensity of the global economy generally is projected to decrease, and renewable energy generation is projected to increase dramatically by 2040, but fossil fuel consumption is still expected to rise without new policies. Further increases in fossil fuel use would be detrimental to efforts that aim to prevent increases in global temperatures. “We have a disconnect between the level of ambition and the level of climate action that’s been taken,” said RFF President and CEO Richard G. Newell at the RFF Live event this week that launched the Global Energy Outlook report.
Related research and commentary:
Why has carbon pricing, long favored by economists, struggled to gain much traction in Congress this year?
President Joe Biden’s top legislative priority—a major infrastructure and clean energy package—has stalled, with Biden announcing this week that he will cease bipartisan negotiations with Senator Shelley Moore Capito (R-WV). As a separate group of moderate policymakers tries to develop compromise legislation, progressive policymakers are urging the administration to fast-track a major package through the Senate’s reconciliation procedure rather than compromise on climate. But even the legislators who are committed to speeding up the process disagree over which environmental provisions to prioritize. Dozens of representatives are pushing a carbon tax and dividend bill that they hope can be folded into the infrastructure package, and some reports indicate that carbon pricing is under consideration by the newly formed group of bipartisan negotiators. Still, a carbon price—long favored by economists and now popular among some business groups, too—has confronted skepticism from some administration officials and is increasingly opposed by environmental justice groups that have concerns about the impacts of conventional climate policies on vulnerable communities.
A new blog post from Cole Martin (yours truly) examines the political future of carbon pricing, a tool which corporate leaders have increasingly supported in ongoing negotiations related to climate provisions in the infrastructure bill. Over the past year, the American Petroleum Institute, the Business Roundtable, and a variety of fossil fuel producers have formally endorsed carbon pricing—a sea change for groups and companies that traditionally have opposed environmental regulations. But at the same time, efforts to pass carbon pricing legislation often have inspired intense resistance, both federally (after the failure of the Waxman-Markey cap-and-trade bill in 2009) and at the state level. “The political feasibility of carbon pricing remains relatively low,” notes RFF Fellow Marc Hafstead in the blog post. “Climate-conscious policymakers who support alternative policies may simply be exploring alternative options.” Still, as RFF research indicates, a carbon price can allow businesses to invest with greater confidence and can be designed to mitigate impacts on low-income households.
Related research and commentary:
How can the federal government approach efforts to decarbonize the industrial sector and boost cleaner fuels?
US Secretary of Energy Jennifer Granholm announced this week that the Biden administration is launching a major investment in hydrogen energy as part of its Energy Earthshots initiative, which aims to advance various carbon-neutral fuel sources. Although Climate Envoy John Kerry previously has expressed reserved enthusiasm for hydrogen, the Earthshots program indicates that the administration will throw its full weight behind developing clean sources of hydrogen. The program’s ultimate goal is to lower the cost of “green hydrogen”—hydrogen produced by using either renewable or nuclear power—from its current price of $5 per kilogram to $1 per kilogram by 2030. The project is still in preliminary stages, though the US Department of Energy has requested roughly $400 million in its 2022 budget for innovation in hydrogen energy production. Currently, the Energy Department is researching the potential impact of green hydrogen on emissions reductions goals and attempting to find the best locations for hydrogen production projects.
An article from the new issue of Resources magazine—themed on a comprehensive view of the tools that policymakers can use to help decarbonize the major sectors of the US economy—discusses strategies for decarbonizing the industrial sector and expanding the production of clean hydrogen. In the article, RFF’s Alan Krupnick, Joshua Linn, Richard D. Morgenstern, and Dallas Burtraw outline the various tools that governments can use to incentivize hydrogen production and other less carbon-intensive industrial practices, including tax credits, energy efficiency standards, tradable performance standards, and expanded research and development funding. They note that no one strategy is a perfect solution—instead, combining various strategies can speed emissions reductions: “For example, a carbon price applied to all industrial sources of CO₂ would encourage factory managers and company owners to find the cheapest ways of reducing emissions,” but “sufficiently high carbon prices to decarbonize the industrial sector may be politically infeasible.”
Related research and commentary:
- Magazine: Federal Climate Policy Toolkit: Industrial Sector
- Blog: The Potential of Hydrogen for Decarbonization: Evaluating Zero-Carbon “Green” Hydrogen Against Renewable and Nuclear Power
- Report: Decarbonized Hydrogen in the US Power and Industrial Sectors: Identifying and Incentivizing Opportunities to Lower Emissions
Finally, here's this week #FactOfTheWeek, taken from RFF's new Global Energy Outlook report.
Apinan / Shutterstock
37% to 104%
Under all the energy projections assessed by RFF scholars in the Global Energy Outlook 2021 report, electricity generation is projected to increase by 2040 compared to 2019 levels. But the projected increase largely depends on the analysts’ assumptions and spans a wide range of 37 percent to 104 percent.