Remarks for Senior Advisor Brian Deese — As Prepared for Delivery
Columbia University Center on Global Energy Policy
It's a pleasure to be here at Columbia and a unique time to talk about climate and energy policy. Abroad, we are writing a new chapter in international climate diplomacy, and at home we are witnessing an historic transformation of our energy sector. In that context, I want to offer a few impressions I have had working on these issues for
1. The decoupling of emissions and economic growth is an historic shift for the US
The first impression is that a lot changes once it is possible to reduce dangerous carbon emissions while growing our economy.
Since the industrial revolution, it has been a tenet of mainstream economics that GDP and carbon emissions grew together. While that growth lifted much of the world out of poverty, it created a structural reliance on carbon-based energy systems that harmed public health and the climate.
The perceived linkage between affordable energy and carbon emissions also defined the politics of climate change. It's hard to convince people to accept a lower standard of living for almost anything, let alone something like climate change that, by its nature, is slow moving and diffuse.
But that has now changed. Since 2010,
[See images in original document] Carbon Emissions Figure 1:
And it's not just
Globally, over the most recent two years with data, the economy has increased by 6.7 percent while energy sector emissions have stayed flat.
Breaking this linkage is economically significant, and politically important. Our successes in reducing emissions over the last several years have not been about sacrifice -- or about trading off prosperity today for some future benefit. It has been about innovation, jobs and contributing to the longest streak of total job growth on record.
In fact, this period of decoupling allows us to say more unambiguously than ever that acting to combat climate change is in our best economic interest. Period. Without action, we risk exposing our economy to trillions of dollars in avoidable damages. Why would we take these economic risks when we have solutions to grow our economy and reduce emissions at the same time?
This is not to say that the transition to lower emissions growth is free from disruptions. That is why for several years,
2. Emission projections demonstrate that policy can make a real difference
Now, it is hard to argue that this decoupling is insignificant. But what if it is an accident of history? Here, the argument goes that emissions initially fell because of the recession; when economic growth picked up, we happened across a revolution in shale gas and, voila, emissions continued to fall.
But my second impression is that accidents of history are rare. Breaking the link between growth and emissions has required sustained policies over time.
In 2010, emissions were projected to grow indefinitely for the next decade. In 2014, our projections showed the same -- though the growth looked to be slowing. But by 2016, our projections showed absolute reductions in emissions -- consistent with our goal of reducing emissions 17% below 2005 levels by 2020.
[See images in original document] Net Emissions Figure 2:
What explains this change? Shifting from coal to natural gas is part of the picture. But the story is increasingly a result of policy.
[See images in original document] In the electricity sector -- our largest emitter of carbon dioxide -- the levelized cost of energy has dropped significantly since 2008: 41 percent for wind, 54 percent for distributed photovoltaic installations, and 64 percent for utility scale solar. These cost reductions were driven, in part, due to investments we made through the Recovery Act, including the tax credits for wind and solar that were extended again last year. When the Clean Power Plan takes effect, it will provide regulatory incentives to continue these market trends.
[See images in original document] Renewable Cost Reductions Figure 3: Renewable Cost Reductions Since 2008Caption
In the transportation sector -- our second largest emitting sector -- petroleum consumption in 2015 was 2 percent lower than in 2008. We use less oil even though our economy has grown more than 10 percent. Few predicted this would happen. Indeed, petroleum use in 2014 was more than 25 percent below 2003 projections, and projected use in 2025 is now 34 percent lower than those prior projections. ?
A principal reason for this surprising outcome is that, for the first time in decades, the President updated fuel economy standards for our nation's passenger vehicles and implemented the first-ever fuel economy standards for medium- and heavy-duty trucks.
[See images in original document] Petrolium Consumption Figure 4: Total
The same dynamic is at play in the industrial, and commercial and residential sectors -- our third and fourth largest sectors -- where energy consumption today is holding flat despite a larger economy. Again, this is not a spontaneous phenomenon but one that results, in part, from government efforts. For example, since 2009 the
3. Even "second best" policy approaches can be well worth it
Now, our policy approach isn't perfect. In fact, if you were starting from scratch you would not arrive here. And of course, theory suggests a nationwide price on carbon would lead to even more economically efficient outcomes.
But it's important to take very seriously the first best nature of a second best policy framework.
When you look at the modeling under an economy-wide carbon price, the vast majority of initial reductions come from the power sector. And because the Clean Power Plan relies on well-established Clean Air Act authority to put in place a market-based, flexible approach to reduce emissions in the power sector, much of the initial emissions reductions we achieve will closely mirror the initial emission reductions under an economy-wide approach.
And in a political environment where the prospects of a de novo national carbon pricing mechanism passing
4. Domestic success is paying increasing international dividends
This second best policy approach has also enabled
Our domestic leadership in reducing emissions provided the credibility to form an historic partnership with
One of the key questions coming out of
While I did not plan this timing, the answer is emerging as I speak:
Entry into Force. First, last week, we crossed the threshold needed for the Paris Agreement to enter into force. Shortly after the Agreement was adopted, there was a serious discussion about how soon this should happen. Some argued it would be prudent to push for entry into force well before 2020 to encourage global climate momentum. Others thought there was value in moving slower, to allow certain provisions of the Agreement to be revisited. But virtually no one thought it was possible for the Agreement to enter into force this year.
In the days following
The process over the past nine months has been challenging; it required overcoming doubters and urging ambition. But the result is an important sign of
[See images in original document] Joining Countries Figure 5: Countries Joining the Paris Agreement in 2016
Aviation Emissions. Second, and also last week, more than 190 countries agreed to cap net emissions from international aviation, under a system where airlines will have to reduce emissions or purchase carbon offsets for any emissions above the cap.
This fills a gap left by the Paris Agreement. International aviation represents only 2 percent of global emissions today, but the sector is forecasted to grow 5 percent each year beyond 2020, posing a threat to
A year ago, few thought addressing international aviation emissions was possible. Unlike
By doing so, the world has established a compelling blueprint for reducing emissions in a market-based manner for highly integrated and high emitting sectors in our globalized economy.
Montreal Protocol. Third, this week in
The verdict is still out on this one, and it's one reason I need to get back to DC.
But already more than 100 countries have called for an ambitious amendment with an early freeze date. And donor countries and philanthropies have made the single biggest contribution of financing for energy efficiency in this sector. So I remain optimistic about what we can achieve this week.
5. The path forward
In summary: decoupling is here to stay; it's not an accident of history; and while our policy architecture is inherently second-best, it is paying real dividends, which have only increased internationally since
So where do we go from here?
Optimizing and harmonizing sector-by sector approaches. First, more attention must be paid to optimizing and harmonizing the sector-by-sector approach to reducing emissions. This means making it easy and attractive to adopt market based regulatory approaches and encouraging trading wherever feasible -- something the
Of course, this doesn't mean abandoning a potential economy-wide solution. But given the moment we're in, we will need more work and brainpower -- including from centers like this one -- on how to make the second best architecture more effective in the future.
Linking Climate and Conservation. Second, we'll need to put much more focus on the least discussed component of our climate strategy -- land conservation. If the policy architecture I just described holds, then squeezing additional reductions out of a largely decarbonized power sector will become increasingly difficult. As a result, we will need to bolster the forests, agricultural lands, and urban areas that are likely to remain our most effective carbon capture and sequestration mechanism.
This will require fundamentally rethinking policy. While we've improved our measurement of sinks, invested in research that promotes climate-smart land management and agriculture, and developed new business models for conservation, we need to do more. We need to find ways to implement pay-for-practice incentives so that negative emissions become one of the many commodities our farmers and foresters can generate. We need to think bigger about reforesting. And we need to ensure we're using
Taking climate resilience as seriously as climate mitigation. Third, we can't ignore what is happening all around us -- even as we accelerate our mitigation efforts. This weekend, we watched in horror the devastation that Hurricane Matthew caused in the
International leadership and ambition. My last point is that we must believe in the proposition that momentum, speed and ambition are possible on the global stage. Just as entry into force of the Paris Agreement went from an impossibility to an inevitability this year, we must set our sights higher, be more audacious, and then make good on those aspirations.
In short order, that means building out
6. Conclusion
That is a full plate, but it underscores that this is an exciting time to care about and work on climate policy. Of course it's a little scary too. The President was asked last week to give a grade to our global efforts to combat climate change. He gave us an "incomplete." The problem is accelerating and the science is increasingly clear. But internationally and domestically, we've begun to put in the place the frameworks necessary to conquer this challenge. And as we come to the end of this Administration, that's worth noting. Briefly. Before we get back to work.
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