Http://pesd.stanford.edu/ 1 Climate Change: Designing an Effective Response David G. Victor.

1

http://pesd.stanford.edu/

Climate Change: Climate Change: Designing an Effective Designing an Effective

ResponseResponse

David G. Victor

Program on Energy and Sustainable Development - http://pesd.stanford.edu/ 2

OutlineOutline

• Five Myths Meet their Maker

• Toward an effective Climate Strategy

• Roles for America


Five MythsFive Myths

1. Climate Change isn’t a problem




2. Fossil Fuels will Run Out Shortly


Tapping the World’s “Infinite” Gas ResourcesTapping the World’s “Infinite” Gas Resources

White: where the lights are on, satellite imageryBlue Red : Gas resources, with increasing size (USGS)

Source: Baker Institute (Rice) and PESD (Stanford) Joint Study on the Geopolitics of Gas (CUP, forthcoming





3. The “Engineer’s Myth”• Technological Solutions, once identified, can spring forth and

multiply


Rapid Evolution: DRAMsRapid Evolution: DRAMs

0%

20%

40%

60%

80%

100%

1970 1975 1980 1985 1990 1995 2000 2005

Sh

are

of

DR

AM

gen

erat

ion

in t

ota

l mar

ket

(%

)

4K

16K

64K

256K

1M

4M

16M

64M

256M

128M

Source: Ausubel and N. Victor


Learning CurvesLearning Curves


When does Learning Stop?When does Learning Stop?The experience with gas turbinesThe experience with gas turbines

Source: Colpier and Cornland. 2002. “The Economics of the Combined Cycle Gas Turbine – An Experience Curve Analysis.” Energy Policy 30: 309-316.


Slow Evolution: Primary Energy SystemsSlow Evolution: Primary Energy Systems

0%

20%

40%

60%

80%

100%

1800 1850 1900 1950 2000

Wood

Nuclear

Gas

Oil

Coal

Hydro elec.

Source: Nakicenovic and Grubler; IIASA






multiply

4. The “Planning Myth”• Governments and firms optimize with full information and leverage






multiply

4. The “Planning Myth”• Governments and firms optimize with full information and leverage

5. The “Diplomats’ Myth”• Policy Planning can be extended to the global level

• All countries should be involved in the most effective solutions


Antarctic Whaling: Perfect complianceAntarctic Whaling: Perfect compliance

Antarctic Whaling:catch by species and compliance with IWC quotas

0

10,000

20,000

30,000

40,000

50,000

60,000

1920 1930 1940 1950 1960 1970

Year

Nu

mb

er

of

wh

ale

s

0

5000

10000

15000

20000

Blu

e W

ha

le U

nit

s

(to

tal c

atc

h a

nd

qu

ota

)

Blue Fin Humpback Sei-Bryde's Minke Sperm Total Catch IWC Quota


Trends in Fossil Carbon EmissionsTrends in Fossil Carbon Emissions(Trajectories and Kyoto Commitments)(Trajectories and Kyoto Commitments)

0

1000

2000

3000

4000

5000

6000

7000

1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

MtC

O2

BPAmoco_HHV

IIASA/WEC

Oak Ridge

EIA

IEA_LHV

Official FCCC baseyear

USA

EU15

Japan


Trends in Fossil Carbon EmissionsTrends in Fossil Carbon Emissions(Trajectories and Kyoto Commitments)(Trajectories and Kyoto Commitments)

0

1000

2000

3000

4000

5000

6000

7000

1910 1920 1930 1940 1950 1960 1970 1980 1990 2000 2010 2020

MtC

O2

BPAmoco_HHV

IIASA/WEC

Oak Ridge

EIA

IEA_LHV

Official FCCC baseyear

USA

EU15

Japan


Toward and Effective Climate StrategyToward and Effective Climate Strategy


Three Elements of An Effective Climate Three Elements of An Effective Climate StrategyStrategy

1. Build Carbon Markets from the “Bottom Up”


A Madisonian Perspective:A Madisonian Perspective:Emerging Carbon CurrenciesEmerging Carbon Currencies

(10)

(5)

-

5

10

15

20

25

30

35

40

45

Oct-00 Apr-01 Nov-01 May-02 Dec-02 Jun-03 Jan-04 Aug-04 Feb-05 Sep-05 Mar-06

$/M

etr

ic T

on

ne C

O2

Volume (MTCO2)

1.5 million

500,000

125,000

50,000

EU

PCF CCX

CDM

NSW

UK

Sources: PointCarbon, International Emissions Trading AssociationReprinted from Victor, House & Joy (2005)




2. Tailor and discriminate• Numbers

• Interests


Allocation of World Emissions: Allocation of World Emissions: Only a Few Countries Really MatterOnly a Few Countries Really Matter


Engaging Developing Countries:Engaging Developing Countries:The Clean Development Mechanism (CDM)The Clean Development Mechanism (CDM)

Source: PointCarbon

0

200

400

600

800

1,000

1,200

1,400

1,600

1,800

In Development Project Design Document Commented Registered Credits Issued

Nu

mb

er o

f P

roje

cts

0

100

200

300

400

500

600

700

MtC

O2 R

edu

ctio

ns

Number of Projects (March 8) Number of Projects (July 12) MtCO2e Reductions (March 8) MtCO2e Reductions (July 12)


Limitations of the CDM ModelLimitations of the CDM Model

• Tropical “hot air”: currency devaluation– CH4: land fill and flaring– HFC23: industrial processes gases

• High transaction costs– Small Scale Projects– No methodologies for large-scale energy efficiency and fuel switching

• Baseline identification– Baselines feasible only for marginal activities


• Example: CO2 Savings from Natural Gas

• IEA forecast for China in 2020: – 560GW (coal)

– 67GW (gas)

• What happens if you switch 80GW from coal to natural gas combined cycle?

– Saves 105 Million Tonnes CO2 per year beginning in 2020

Alternative Strategies: Alternative Strategies: Climate-Friendly Development ProgramsClimate-Friendly Development Programs


COCO22 Savings in Perspective Savings in Perspective

0

100

200

300

400

500

600

Year 2000 UKEmissions

Year 2000 Emissionsfrom California Cars

Reductions under"High Gas" Scenario

Reductions from 100Large CDM Projects

Mil

lio

n T

on

nes

CO

2 (A

nn

ual

)




2. Tailor and discriminate• Numbers

• Interests

3. Emphasize Technology as well as Emissions


Full Range of Published ScenariosFull Range of Published Scenarios


Percent of World Total

0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0%

Arab States

Africa

SE Asia

C & E Europe

Oceania

Latin America

India & C. Asia

CIS

China

Japan and NICs

Western Europe

North America

Gross Expenditure on R&D(1994)Scientific Output (SCIPublications, 1995)Carbon Dioxide Emissions(1998)

Top Innovators and Emitters by World Top Innovators and Emitters by World RegionRegion


Elements of a Technology StrategyElements of a Technology Strategy

• Diverse Country-Based Initiatives

– Loose international coordination

• Basic and Applied technology

– Common pitfall: premature selection of winners

• Price and technology progress are not either/or

– Fiction: technology only strategies

– Fiction: price only strategies

• Why price matters

– Signal of credibility

– Aligns markets to invest and adopt lower carbon technologies


America’s RoleAmerica’s Role

• Support small forums as complements to Kyoto

• Lead the technology strategy

• Credible Policies at home


“Carbon Intensity” of the U.S. Economy (1800-1998)

0

100

200

300

400

500

600

700

800

900

1800 1820 1840 1860 1880 1900 1920 1940 1960 1980 2000

CO

2/G

DP

US

France

Japan

United Kingdom

United States

Germany

Intensity: grams C per 1990 USD(mer)


U.S. Climate Change Policy: U.S. Climate Change Policy: State-driven processState-driven process

Source: Pew Center on Global Climate Change

Http://pesd.stanford.edu/ 1 Climate Change: Designing an Effective Response David G. Victor.

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climate change isnt