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Quantitative Analysis of Alternative Transportation under Environmental Constraints

This thesis focuses on the transportation sector and its role in emissions of carbon
dioxide (CO2) and conventional pollutant emissions. Specifically, it analyzes the
potential for hydrogen based transportation, introducing this technological option within
a computable general equilibrium (CGE) model of the economy. The transportation
sector accounts for an important part of CO2 emissions and analyses that have imposed
carbon limits on the economy have shown relatively limited reductions in transportation
emissions with current technology, thus the interest in technological options that would
make it economic to reduce emissions. The US Federal government has been particularly
focused on developing fuel cell technology for vehicles that, when powered by hydrogen,
would offer a technological solution that potentially eliminates emissions of both CO2
and other conventional pollutants from the transportation sector. This work examines the
economic conditions under which such a technology might successfully compete in the
market.
The thesis begins with an overview of the fuel-cell vehicle technology and the
technologies used to produce hydrogen. This review serves as a basis for modeling this
technological option. The main conclusions are the following:
• Under market conditions and in the absence of climate policy that would price
carbon, hydrogen fuel cell vehicles penetrate the USA market when the cost of
vehicles is no more than 1.30 times the cost of conventional vehicles, and assuming
hydrogen can be produced at 1.30 times the 1997 price of gasoline. Even if this cost
target is reached and hydrogen vehicles enter the market, CO2 emissions for the US
are reduced only very slightly because coal is used to produce the hydrogen and there
is no incentive to sequester the carbon when the hydrogen is produced.
• The existing fuel tax structure in Europe strongly favors the entry of hydrogen
transportation, even when hydrogen is taxed at the same rate as gasoline. This is
because the hydrogen vehicles are more efficient, and assuming the tax rate is per unitof energy, this implies a lower tax per vehicle mile traveled. Entry is possible in the
middle of the century when hydrogen vehicles are twice as expensive as conventional
vehicles when the fuel taxes based on energy content of the fuel are equal. If
hydrogen were not taxed at all, then hydrogen vehicles could enter if they were less
than four times as expensive as conventional vehicles but this would mean European
governments would lose all fuel tax revenue.
• An emissions constraining policy would favor hydrogen transportation allowing US
penetration with vehicle costs up to 1.7 times conventional vehicle costs.
• The availability of biomass fuels (e.g. ethanol) is a strong competitor, which can
prevent or delay hydrogen entry. When the biomass fuel option was removed,
hydrogen vehicles entered 10 years sooner.
Overall, hydrogen technology faces significant technological hurdles. Cost-reductions
of more than an order of magnitude are needed before hydrogen technology penetrates
the market. The vehicles must also obviously offer comparable or improved features
compared with existing vehicles, and the hydrogen fuel must be conveniently and safely
supplied. Even if significant cost reductions occur, the technology may face competition
from other technologies such as ethanol. Finally, if hydrogen technology is able to
penetrate the transportation sector, CO2 emissions will not be reduced unless a policy
either provides price incentives or mandates the sequestration of emissions from the
hydrogen producing plants.

Natural Gas, Coal, and Climate (OpEd)

Recent research has shown that over the next few decades an effective U.S. climate policy to significantly reduce greenhouse gas emissions would rely on extensive reductions in energy use and substitution of natural gas for coal in power generation. The second pathway - gas-for-coal - is premised on the fact that natural gas, when combusted, produces 50 percent lower CO2 emissions than coal.

A recent paper by Cornell Professor Robert Howarth and others in Climatic Change Letters calls the gas-for-coal solution into serious question, suggesting that natural gas power generation is twice as greenhouse gas (GHG) intensive as coal. Howarth bases this conclusion in part on his assessment of methane leakage in the production stages of natural gas, with a specific focus on new methods to produce unconventional shale gas. [...] The Howarth study raises some legitimate questions about the uncertainties surrounding associated estimates of methane emissions - but Howarth's conclusions depend on a couple of unsound assumptions. [...]

Reduced energy use and coal-to-gas substitution could provide a bridge to a low carbon future, enabling us to move forward on climate change mitigation while we continue critical research on other more advanced technologies. Energy alternatives require close scrutiny for their range of impacts on the environment - the environmental effects of shale gas are no exception.

It would, however, require much more compelling evidence and analysis to persuade us that we should actually use more coal and less natural gas power generation, a logical conclusion from Howarth's paper. Calculations that test conventional wisdom are important in driving further scrutiny. The preponderance of the evidence, however, continues to support the conclusion that substitution of gas for coal in power generation is an important component of a sensible and effective near-term climate change policy.

Necessary conditions for stabilization agreements

About the book: This book provides an updated overview of the current research on analysis and modelling of international agreements on climate change. The book first offers a theoretical framework for understanding the features of international agreements on climate, then shows different integrated assessment modelling approaches designed to analyse the impact of possible agreements of emissions abatement and the related costs. In the book, which is the outcome of cooperation between the Stanford Energy Modelling Forum and the Fondazione ENI E. Mattei, most economic/climate modellers provide their own assessment of climate policies and in particular of the potential implications of the Kyoto agreement. Institutional and legal issues and the political economy behind international agreements on climate are not neglected, thus providing a comprehensive, albeit preliminary, exploration of crucial aspects of current negotiations on climate. In view of the beginning of the new IPCC process that should lead to the 2000 IPCC report, this book constitutes an important basis of knowledge and a good example of fruitful interactions amongst different experts. The complexity which characterises climate issues and the uncertainty surrounding the causes and effects of climate changes makes this interdisciplinary effort vital for a careful design of future policy actions.

Necessary Conditions for Stabilization Agreements

The Climate Convention calls for stabilization of atmospheric concentrations of greenhouse gases. This paper considers the issues that must be faced in formulating a plan to meet any such target, using a proposed CO2 level of 550 ppmv as an example. We hypothesize a set of "necessary conditions" for such a goal to be achievable, and test set of possible forms of agreement against them using the MIT Emissions Prediction and Policy Assessment (EPPA) model. The results highlight the importance of emissions trading to the feasibility of such a target, and the need for an agreement that can adapt efficiently over time to changing relative economic circumstances in participating nations.

Needed: A Realistic Strategy for Global Warming

Through a brief look at the science and economics of climate, the authors show that if climate change turns out to be a serious threat, an effective response will require a substantial and very long-term global effort. Today's focus on near-term emissions reductions will be counter-productive if it delays development of the institutions and policy architectures that would be necessary to mount and sustain such an effort over much of the next century. The authors discuss three legacies that our generation could leave that would make this struggle to devise a global response easier: (1) an international climate agreement that could, if necessary, reduce greenhouse gas emissions substantially, at least cost, while being responsive both to changes in our scientific understanding and to evolving political and economic conditions, (2) enhanced technical options that could, if necessary, ease the task of maintaining economic growth while controlling greenhouse gas emissions, and (3) an international system that could, if necessary, transfer substantial sums to developing countries to assist their participation in an emissions control effort. Building these legacies is a huge challenge, but this task merits at least the same sense of urgency that has motivated pre-Kyoto negotiations about short-term CO2 emissions reductions.

Negative learning and global environmental change

New technical information may lead to scientific beliefs that diverge over time from the a posteriori right answer. We call this phenomenon, which is particularly problematic in the global change arena, negative learning. Negative learning may have affected policy in important cases, including stratospheric ozone depletion, dynamics of the West Antarctic ice sheet, and population and energy projections. We simulate negative learning in the context of climate change with a formal model that embeds the concept within the Bayesian framework, illustrating that it may lead to errant decisions and large welfare losses to society. Based on these cases, we suggest approaches to scientific assessment and decision making that could mitigate the problem. Application of the tools of science history to the study of learning in global change, including critical examination of the assessment process to understand how judgments are made, could provide important insights on how to improve the flow of information to policy makers.

Net emissions of CH4 and CO2 in Alaska: Implications for the region's greenhouse gas budget

We used a biogeochemistry model, the Terrestrial Ecosystem Model (TEM), to study the net methane (CH4) fluxes between Alaskan ecosystems and the atmosphere. We estimated that the current net emissions of CH4 (emissions minus consumption) from Alaskan soils are ~3 Tg CH4/yr. Wet tundra ecosystems are responsible for 75% of the region's net emissions, while dry tundra and upland boreal forests are responsible for 50% and 45% of total consumption over the region, respectively. In response to climate change over the 21st century, our simulations indicated that CH4 emissions from wet soils would be enhanced more than consumption by dry soils of tundra and boreal forests. As a consequence, we projected that net CH4 emissions will almost double by the end of the century in response to high-latitude warming and associated climate changes. When we placed these CH4 emissions in the context of the projected carbon budget (carbon dioxide [CO2] and CH4) for Alaska at the end of the 21st century, we estimated that Alaska will be a net source of greenhouse gases to the atmosphere of 69 Tg CO2 equivalents/yr, that is, a balance between net methane emissions of 131 Tg CO2 equivalents/yr and carbon sequestration of 17 Tg C/yr (62 Tg CO2 equivalents/yr). 

© 2007 Ecological Society of America

Net Primary Production of Terrestrial Primary Production in China and Its Equilibrium Responses to Changes in Climate and Atmospheric CO2 Concentration

The Terrestrial Ecosystem Model (TEM, version 4.0) was used to estimate net primary production (NPP) in China for contemporary climate and NPP responses to elevated CO2 and climate changes projected by three atmospheric general circulation models (GCMs): Goddard Institute for Space Studies (GISS), Geophysical Fluid Dynamic Laboratory (GFDL) and Oregon State University (OSU). For contemporary climate at 312.5 ppmv CO2, TEM estimates that China has an annual NPP of 3,653 TgC/yr (1012 gC/yr). Temperate broadleaf evergreen forest is the most productive biome and accounts for the largest portion of annual NPP in China. The spatial pattern of NPP is closely correlated to the spatial distributions of precipitation and temperature.
        Annual NPP of China is sensitive to changes in CO2 and climate. At the continental scale, annual NPP of China increases by 6.0% (219 TgC/yr) for elevated CO2 only (519 ppmv CO2). For climate change with no change in CO2, the response of annual NPP ranges from a decrease of 1.5% (54.8 TgC/yr) for the GISS climate to an increase of 8.4% (306.9 TgC/yr) for the GFDL-q climate. For climate change at 519 ppmv CO2, annual NPP of China increases substantially, ranging from 18.7% (683 TgC/yr) for the GISS climate to 23.3% (851 TgC/yr) for the GFDL-q climate. Spatially, the responses of annual NPP to changes in climate and CO2 vary considerably within a GCM climate. Differences among the three GCM climates used in the study cause large differences in the geographical distribution of NPP responses to projected climate changes. The interaction between elevated CO2 and climate change plays an important role in the overall response of NPP to climate change at 519 ppmv CO2.

New entrant and closure provisions: How to they distort?

Provisions to endow new entrants with free allowances and to require closed facilities to forfeit allowance endowments are ubiquitous in the EU Emissions Trading Scheme, but a new design feature in cap-and-trade systems. This essay seeks to explore, within a comparative statics framework, the effect of these provisions on agent behavior in output and emissions markets assuming profit maximization. The main conclusion is that the principal effect is on capacity. The effect of the resulting over-capacity on output markets is to reduce output price and to increase output. The effect on emissions markets is more ambiguous in that it depends on the emission characteristics of the new capacity, existing capacity, and the capacity not retired, and the distribution of the excess capacity among these categories.
Copyright IAEE

New Entrant and Closure Provisions: How to they Distort?

As a person whose life began in England and ended in North America and who maintained academic affiliations in the United Kingdom, Canada and the U.S., Campbell Watkins had a fine appreciation for the subtle differences that mark the two sides of the North Atlantic. He embodied the cross-fertilization that trans-Atlantic exchanges imply and I have no doubt that that was one of the reasons the IAEE received so much of his attention and benefited so grandly from it. This essay concerns one of those trans-Atlantic exchanges and one of which Campbell would have enjoyed the irony: An American innovation that goes to Europe and becomes bigger than anything yet seen in North America. The transplant is the cap-and-trade form of emissions trading and the European application is the European Union CO2 Emissions Trading Scheme (EU ETS). More specifically, this paper focuses on a particular feature of the allocation process in the European variant, the endowment of new entrants with allowances and the forfeiture of allowances when facilities are closed.

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