Policy Choices
Climate-friendly Energy Policy: Options for the Near Term
Climate-Friendly Energy Policy Choices
Using the criteria outlined above, the following elements of a climate-friendly energy policy have been identified:
Fossil Fuels
Expand natural gas transportation infrastructure. Encouraging expansion of the natural gas transportation system in North America through, for example, rate incentives, streamlined permitting for pipeline and liquefied natural gas (LNG) facilities, and expedited approvals needed for construction of an Alaska natural gas pipeline, will increase the delivery capability for natural gas and lower the price of the delivered product. This will facilitate the use of gas as a substitute for coal in electricity production and thus reduce GHG emissions.
Increase natural gas production. Encouraging increased production of natural gas in North America through, for example, tax incentives, royalty relief, and access to public land for resource development will lower the price and increase the availability of natural gas. This will, in turn, permit the use of gas as a substitute for coal in electricity production and thus reduce GHG emissions.
Electricity
Encourage deployment of efficient electricity production technologies. Encouraging developers of new generation capacity to employ very efficient generation technologies—with tools such as tax incentives for combined heat and power and high-efficiency distributed generation—can significantly increase the amount of useful energy gleaned from fuels, and thus reduce both energy costs and emissions. Moreover, support for repowering existing plants with technology that improves the efficiency of electricity generation can reduce electricity prices and reduce fuel consumption per kilowatt-hour (kWh), with corresponding GHG reduction benefits. Conversely, policies that discourage such investments in improved efficiency, and instead result only in energy-consuming pollution control retrofits (e.g., scrubbers to reduce conventional air pollutants), may be counterproductive from a climate perspective. Incentives for investment in advanced technologies such as carbon capture and sequestration would allow future use of coal resources without net GHG emissions.
Maintain role for nuclear and hydroelectric power. Policies that allow the safe continued use of nuclear power plants—such as granting license extensions, approving plant upratings where warranted, and finding new solutions to the nuclear waste problem—preserve diversity of energy supply, may reduce electricity prices, and avoid very substantial coal consumption for electricity generation. Likewise, maintaining or expanding hydroelectric capacity in a way that protects natural resources provides low-cost electricity without GHG emissions.
Encourage development of renewable energy resources. Policies that encourage the development of renewable energy resources—such as production tax credits, a renewable portfolio standard, electricity transmission policies that do not discriminate against intermittent renewable resources such as solar and wind, and net metering for small distributed renewable resources—can help diversify our energy portfolio and are environmentally attractive. Wind, solar, geothermal, and hydropower generation produce no GHG emissions, and use of biomass produces no net GHG emissions.
Buildings End-Use Efficiency
Promote use of efficient technologies and green design in buildings. Policies that require increased efficiency of energy end-use (such as building codes or appliance efficiency standards), and policies that encourage use of highly efficient equipment and technologies (such as tax incentives, product efficiency labeling, and Energy Star™ programs) can significantly reduce energy consumption, consumer operating costs over a product’s or building’s lifecycle, the need for investment in new power plants, and emissions related to energy use.
Industrial End-Use Efficiency
Promote the use of more efficient processes and technologies in industry. Policies that provide incentives for investment in efficient processes and combined heat and power technologies, expand coverage of efficiency standards to standard-design industrial equipment, and provide more information on efficient technologies to industrial consumers can lead to further emissions reductions in the industrial sector.
Transportation
Enhance end-use efficiency of automobiles and light trucks. Regulatory and tax policies—such as more stringent CAFE standards, reforms to the “gas guzzler” tax, efficiency standards for tires, and tax or other incentives for the purchase of highly efficient hybrid vehicles—can significantly reduce fuel consumption per mile, thus reducing oil consumption and mitigating reliance on oil imports. Very significant energy and climate policy benefits can be gained in this area. According to a recent National Research Council study, if lead times are long enough, automakers can produce substantially more fuel-efficient vehicles without increasing net consumer costs or compromising safety.25 Moreover, fundamental redesigns such as hybrid vehicles (already commercially available in some Honda and Toyota vehicles) and fuel-cell vehicles offer important additional benefits.
Research and Development
Promote research and development on efficient electricity production technologies. Federal funding or tax incentives for R&D on improving the efficiency of the electricity generation process, regardless of fuel source, can provide options to reduce future energy prices and reduce future fuel consumption per kWh, with corresponding GHG benefits.
Promote research and development on efficient end-use technologies. Federal funding or tax incentives for R&D on improving transportation, building, and industrial end-use efficiency can provide options to reduce future energy costs to consumers and to reduce future energy consumption, with corresponding GHG benefits. Support for R&D is particularly important in areas where fundamental changes are possible, such as the widespread use of hydrogen in fuel cells to power vehicles.
Promote research and development on non-fossil fuels and carbon sequestration. Federal funding or tax incentives for R&D on alternatives to fossil fuels, such as biofuels and hydrogen, can provide future viable alternatives to oil. Development of economical carbon sequestration technologies could enable continued reliance on coal consistent with a GHG regulatory regime.