The USA on target? Yes, according to the Administration!

It has been an interesting week for climate change news, with the IPCC releasing its full report on renewable energy, the European Commission moving ahead with energy efficiency legislation, very little happening at the UNFCCC talks in Bonn and of course the battle over carbon pricing continuing in Australia. In scanning the Australian media I spotted an insightful interview with the United States Ambassador to Australia. In the interview, Ambassador Bleich argues that the USA is on track to meet its 2020 greenhouse gas target (17% below 2005 levels) because of the breadth of activity across the economy in transforming the energy system.

 THE US ambassador to Australia says America is pulling its weight in international efforts to reduce greenhouse emissions, contrary to suggestions a carbon tax would see Australia acting ”ahead of the rest of the world”. In an interview with the (Sydney Morning) Herald, Ambassador Jeff Bleich said the idea that America was lagging was “not accurate at all” and it was “absolutely realistic” to believe the US would meet its target of a 17 per cent reduction in emissions by 2020, based on 2005 levels.

“The US is taking dramatic action, if you look at the largest investment in history in energy transition, the major regulatory reforms for the largest emitters and consumers of energy, the focus on the dirtiest emission technologies used by power plants and vehicles … we are moving on a very aggressive regulatory effort,” he said. “… there’s absolutely no question the United States has been doing a tremendous amount over the last two years … and going forward the President has said we need to double what we are doing because that is good for our economy.”

The Californian emissions trading scheme, due to start next year, could also have “dramatic effects”, for that state and potentially on a broader scheme for the western states of the US and Canada, he said. Although President Obama had been clear he preferred a national cap and trade scheme, when that was not successful in Congress he had moved to different approaches. These had not put the United States at a competitive disadvantage with major trading partners because China, Europe and others were taking action as well, nor had US companies in Australia expressed concern that a carbon tax would disadvantage their business here.

The Australian Industry Greenhouse Network has cited figures from the US showing that because of the impact of the financial crisis, US emissions were not scheduled to return to 2007 levels until 2027, suggesting that the US emissions reduction target was now easier and no longer required an “equivalent effort” to Australia’s emissions reduction target of a 5 per cent cut based on 2000 levels.

Ambassador Bleich said that while the financial crisis may have had an impact on emissions, the measures being taken by the administration were also having a real impact.

The recent Productivity Commission report said the US was spending a little less than Australia on reducing emissions as a percentage of GDP and was abating less from its electricity sector, but Ambassador Bleich said the report had provided more evidence that major emitters were all acting.

I have discussed this before, but it is worthy of a revisit. There is no question that US emissions have fallen in part as a result of the recession, but the increasing availability of natural gas and generally higher energy prices causing consumers to think about energy use are also having an impact. Furthermore, a variety of renewable energy programmes (but mainly wind) are filling in capacity gaps in the power market and the Bush Administration bio-fuel mandates are having an impact in the road transport sector.

I recently revised my own analysis of US emissions for a conference and developed the following summary picture:

In terms of progress from today, the two big ticket items remain natural gas substitution for coal and the impact of CAFE standards in the transport sector. Emission and water regulation (not including GHGs) under the Environmental Protection Agency (EPA) could result in a substantial portion of US coal fired power generation shut down by 2020. The displacement of up to 70 GW of coal fired generation capacity would require about 7.8 Bcf/day of natural gas or some 4 years of production increase, assuming the current production trend is maintained. Even if the annual increase was half the current trend, sufficient additional production would be available for such large scale substitution over the period 2012-2020.

The real unknown of course is the possibility of an emissions upswing over this decade as the economy shifts back into full gear.

US success in meeting the 2020 target could profoundly affect the broader discussions on reducing CO2 emissions, both in the USA and more widely. After 2020 we might we see more acceptance of CO2 measures on the basis that emissions had fallen, it hadn’t damaged the economy or society, so “we can then do more”. But it could be a double edged sword, with complacency creeping in on the back of the argument that the market has responded and CO2 is taking care of itself, so there is no need to worry about it.