Let’s say that the Green New Deal involved a national consensus to decrease pollution in order to keep the planet habitable. We’d base that decision off prolonged scientific consensus that greenhouse gases from industrial activity were driving climate change. https://www.ipcc.ch/site/assets/uploads/sites/2/2018/07/SR15_SPM_version_stand_alone_LR.pdf
As a major contributor, we as a nation might focus on decreasing non-sustainable fossil fuel sources in favor of abundant clean sources and invest practically in renewable technologies. We’d do so in ways that least adversely effect tax payers. Think that isn’t possible? As it turns out, the revenue to fund the Green New Deal can come from private market mechanisms not directly placed upon tax-payers, but rather the non-sustainable industries themselves. All that’s required is a straightforward combination of economic incentives and disincentives already operating on the state level. Here’s the plan.
Our most basic, preemptive decision would be to phase out fossil fuel subsidies.
This one’s a precursor; If we’re going to be cost efficient while investing in clean and renewable energies, we can’t be counter-productive. Therefore, we must phase out the government subsidies given to various fossil fuel industries, at a rate that negates sudden shortages or price increases, especially as they pertain to the transportation and defense.
Most Americans are unaware that fossil fuel industries have been granted various government subsidies for their operations at the taxpayers’ expense. To briefly cover the federal level; subsides include tax deductions for oil spills, tax exemption for firms under the Master Limited Partnership, royalty- free drilling along federal lands, reduced prices on land leases, and the omission of tar sands from the Oil Spill Liability Trust Fund, all totaling around $15 Billion. On the state level, the most conservative estimated yearly average for 2016 (meaning estimates that do not include any indirect subsidies or externalities) reached 5.8 billion dollars. http://priceofoil.org/content/uploads/2017/10/OCI_US-Fossil-Fuel-Subs-2015-16_Final_Oct2017.pdf
The biggest arguments against repealing oil subsides will be impacts at the pump and on national security. And indeed, pragmatic divestments must be made. Given the urgency of climate change, a most conservative divestment strategy might include cutting collective subsidies by $2 Billion per year for ten years. Those funds could instead be allocated directly to capable electronic automotive industries, in order to scale and build feasibility. To reapply for funds, companies with electric model production like Kia, Nissan, Tesla, BMW and Volvo, would need to demonstrate an increase of electric EV models sold.
Even with a minimized, direct strategy, push backs must be anticipated. Alaskan citizens experienced push backs first hand when, in 2016, they prompted their legislature to recognize and reverse fossil fuel subsidies in with HB 111. House Bill 111 repealed cashable credits given to facilitate oil exploration and development. Within a year artic oil reserves were discovered year and Alaskan oil companies began seeking bail outs. And so, the state began buying back outstanding oil credits to the tune of 1 billion taxpayer dollars. Several critics viewed this shift as backtracking from key commitments. Of course, proponents point out that when dependable employers struggle, a bailout can be justified, despite many of these same proponents pushing for non-interventionist market capitalism when it comes to the renewable energy sector. At the basis of a Green New Deal, the nation might remember that continuing costly fossil fuel subsides will work counter to other means of pursuing clean energy advancements. Transitioning such funds to a greener national infrastructure and pursuance of the electric engine is the clearest and most basic commitment to transitioning to a cleaner energy future.
In a sentence: Phasing out non-sustainable, fossil fuel subsides is the first way to free up $20 Billion for green investment.
With that out of the way, we’d have to impose emission limits
A national cap and trade approach to disincentive pollution is not a new idea. In fact, 12 states are currently in a Regional Greenhouse Gas Initiative, which does just that. The RGGI is the first mandatory market-based regulatory program in the U.S. to reduce greenhouse gas emissions and pertains to electric power plants of 25 MW or more. The cap is designed to decline every year (less pollution over time).
How exactly does cap and trade work?
Well, the idea behind cap and trade is that each state limits (or caps) the total tons of carbon dioxide power plants can emit each quarter. This limit is then divided into allowances (per ton) to be purchased through industry auctions. Mandatory reporting takes place through CO2 Allowance Tracking System (COATS) in 3-year compliance period time-frames, whereby facilities essentially pay to hold permits. These allowances are tradable, so if compliance entities decarbonize and increase efficiency, they can sell extra permits for profit (although this requires the cost of retrofitting and upgrades to be lower than the profit from selling allowances). If their emissions exceed their permits, the plant faces a fine, but allowances can be saved for future use. These allowances are tradable, so if compliance entities decarbonize and increase efficiency, they can sell extra permits for profit (although this requires the cost of retrofitting and upgrades to be lower than the profit from selling allowances). If their emissions exceed their permits, the plant faces a fine, but allowances can be saved for future use.
We’re talking about a lot of money, here. In the latest published report, December 5, 2018 median bid prices were 5.26. The total proceeds were $71,479,472.15. And that’s with less than a quarter of US states participating. With lower limits and spanning more US states, far greater revenue is possible.
Is it really effective?
There’s a lot of potential despite getting off to a rocky start. Although the RGGI was established in 2005, Budget Training Program caps weren’t placed lower than emissions until 2014. In other words, the cap on allowable carbon was way higher than what plants were actually emitting! Annual reduction rates have since been placed at 2.5 percent per year from 2015 to 2020. One of the most comprehensive studies on the RGGI impact measured emissions from its inception in 2005-2012 accounting for outside factors,
asserted that emissions would be, “24% higher in the RGGI region if the RGGI program were not in effect; conversely, they are 19% lower due to the program”.
The most important piece in ensuring this mechanism serves the Green New Deal would be to earmark auction revenues for clean energy efforts. If utilized in the adoption of ambitious, low carbon caps, massive national carbon reductions could be made. A robust RGGI program may also serve as a means to reinforce incentives or programs.
What types of programs could be created with billions of cap and trade dollars?
For those displaced from fossil fuel industries or seeking jobs: State training programs for energy efficiency and grid modernization
For those looking to invest: Federal awards in the form of competitive private contracts
For those looking to serve ratepayers: Issue temporary credits to customers of major energy suppliers in an affordability program
For those looking to decarbonize: Subsidize clean energy with effective credits systems
Third; Scale-up clean energy
Increasing mandatory percentages of clean and renewable energy generation is a key component. The majority of U.S. states have already increased clean electricity generation through a Renewable Portfolio Standard.
What is an RPS?
They’re individual state laws that mandate a certain portion of electricity generation comes from renewable sources. The requirements are set and enforced by separate offices within existing, state regulatory authorities (a Board of Public Utilities, Department of Public Service, etc.) where specialized offices center entirely around ensuring compliance with these electricity grid requirements.
Investor-owned utilities, electricity suppliers, and, in some states, cooperative or municipal utilities are required to procure a portion of their energy portfolio from renewables when providing retail customers with electricity. To keep track, market mechanisms, like renewable energy certificates, are created and monitored through an attribute tracking system. A single certificate might be issued each time 1 Megawatt hour, or 1000 Kilowatt hours, of verifiable renewable electricity is generated. The reporting of electricity generation rests on generators, who own the certificates. If uncooperative with the standard, investor-owned utilities or suppliers (who buy from generators) will face an Alternative Compliance Payment; or penalty for non-compliance. The ACP is more expensive than the Renewable Energy Certificate, making the purchase of electricity from renewable generators (RECs) the more rational option. A REC may only be retired when renewable electricity generators sell their certificates on the tradable market, often to suppliers in need of meeting the requirement.
Some states do not have percentage requirements with RECs at all, opting to instead include capacity requirements for specific renewable sources (examples include Texas and Iowa). Even in states with Renewable Energy Certificate programs, there can be percentage carve-outs or capacity requirements in Mega/Gigawatts for specific renewable generation, including solar or wind. It is also possible for average homeowners to get a share of the REC pie, as has been done with roof-top (distributive) solar. Mandated percentages vary by state, but pricing follows a simple supply curve. The greater the demand for renewables (the further a state program is from meeting it’s RPS target) and fewer the supply of renewable generators, the more valuable the Renewable Energy Certificate. Since the establishment of RPS standards within the last few decades, renewable electricity production has grown steadily. The AEA is currently outlining individualized plans for every U.S. state to increase their clean electricity generation.
ADDING THE ZEC
Once we phase off of fossil fuels, we will be left with an energy deficit to fill, specifically with baseload energy- or steady energy generated to meet minimum demands. Breakthroughs in battery storage for renewables are widely expected given the proper investments. In the meantime, states with high population density have embraced nuclear energy to underpin the growth of emergency renewable capacity. The United Nations also came out in support for the option last year, reflecting a broader support within the scientific community. Under a Green New Deal, plans for 100 percent Clean Energy may include a separate, lesser subsidies or carve outs for atomic energy under Renewable Portfolio Standards. These come in the form Zero Emissions Credit programs, which preserve existing reactors to prevent millions of tons of carbon emissions.
Just like with Renewable Energy Certificates, citizens will not incur any state taxation to establish a Zero Emissions Credit program, but instead, responsibility will be placed upon energy suppliers to gathering a percentage of their energy portfolios zero emissions sources. They must meet a percentage from either renewables or nuclear, all to displace fossil fuels. If the development of new reactors became necessary under climate change mitigation, the AEA asks that the nation consider Molten Salt Fast Reactors which dispel several concerns over waste, proliferation or melt-down risk.
Investing in the growth of an industry translates at this scale will translate into more renewable projects, providing jobs for millions. Recent reports place total US “clean energy jobs” around 3.3 Million, but it’s comparative job growth that has many excited. Already in 2018, clean energy job growth outnumbers fossil fuel jobs 3-1. https://www.e2.org/reports/clean-jobs-america-2019/
What would a federal green job training program look like?
Consider using a portion of fossil fuel state auction revenue for local college programs
Market incentives such as RPS standards and cap and trade will create a higher demand for renewables under a Green New Deal. The second piece to the new deal thus includes job training for prospective industry workers, to increase the supply of clean energy specialists while stimulating the U.S. economy.
Such programs have been created in the past, and are formally referred to as “Federal Energy and Manufacturing Workforce Training Programs”. The Department of Energy and Department of Labor partner with local state colleges and nonprofits in every U.S. state for specialized programs, including the Solar Instructor Training Network, Grid Engineering programs and paths for manufacturing. https://www.energy.gov/eere/education/federal-energy-and-manufacturing-workforce-training-programs. Investigative research by the AEA for those looking to join such programs is mixed. While some programs provide direct contact information for college program admins, other links are outdated, leading only to discontinued award opportunities. A robust Green New Deal would need to revamp such programs through clear application portals and increased award amounts with partnerships. Industry and educational partnerships are contested on both sides, spurring potential for innovation and economic prosperity. Moreover, by ensuring free and discounted training programs or scholarships for displaced energy workers, first generation college students, reentry applicants and veterans among other groups, a Green New Deal could provide increases in economic opportunities for otherwise disadvantaged communities, and lead to further successes in a healthy, net-zero carbon economy.
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Published by Briana:
Briana is a sustainablilty researcher and enthusiast. She loves data and connecting meaningful policy ideas to the real world.