December 17, 2009
The Wisdom of Investment in a World of Mounting Wedges
Let's assume that, as Joe Romm recently argued, all of the additional growth in annual emissions above S/P's 1.5% projection is due to inefficient coal fired power generation. This is probably not wise. Much of the rise in emissions will likely be driven by efficient coal generation -- the world will just build a lot more of it than S/P assumed both because the global economy will grow faster and because much of that growth will be in very energy intensive sectors of the economy as developing nations build modern economic infrastructure. But we'll put those factors aside for the moment and assume that the growth of emissions above the S/P projection is all due to very inefficient coal powered generation.
Looking at Romm's wedges, it appears that wind for power, solar thermal, PV, nuclear, CCS and the three non-vehicle efficiency wedges displace power generation. Wind for vehicles also displaces power generation but that is because we are assuming we have made a massive shift to plug-in hybrids so that is displacing what would otherwise be vehicle emissions not emissions from power generation. Joe, Please correct me if I've missed something in the wedges you've suggested.
Let's use a 1 GtC value for all wedges and multiply those wedges that we assume are replacing power generation by 1.77. By this calculation it appears to me that assuming 3% annual growth in emissions and starting with 8.4 GtC in 2008, you are a little more than a wedge short in 2050. Fair enough, you're in the ballpark so long as we don't look too hard at what it will take to get most of those wedges (e.g. in a post last week you estimated the upper end of potential for PV in 2050 at half a wedge. Here you have it accounting for an entire wedge).
But if we assume 3.3% emissions growth then you are 5 wedges short. If we, as I think Pielke correctly suggests, start with 2008 emissions at 9 GtC and assume 3% annual emissions growth then you are 3.5 wedges short. And if we start at 9 GtC and assume 3.3% annual emissions growth then you are 7.5 wedges short.
I think that Pielke's point about assuming away the problem is that what appear to be very modest shifts in assumptions (like say the difference between 3.0 and 3.3. percent growth in annual emissions) when compounded over time, have enormous implications on scale of the challenge. Assume 1.5% annual growth in emissions, as S/P do, and you get to choose your wedges. Assume 3% growth in emissions annually and you pretty much have to throw every wedge you have at the problem. Assume 3.3% and start at 9GtC and even after you've thrown every wedge you can come up with at the problem you're still 7 wedges short -- as many wedges as the orginal S/P analysis assumed would be necessary to acheive stabilization, only now you've already thrown every wedge you can imagine at the problem.
Romm can continue to try to prove that we can achieve stabilization with existing technology no matter the emissions scenario and we can try to prove that you can't. But, as Romm has noted, wedges are an analytical tool and I think that what this tool is suggesting to us is that if current emissions trends continue, meaning that we don't revert to the 1980 - 2000 emissions trajectory and rather have entered a new phase of global economic and energy development, a view that I think is imminently defensible and that will be pretty definitively validated over the next couple of years, then we are making a pretty risky bet if we are counting on current technology and currently proposed policies (cap and trade plus efficiency and renewables regulations) to achieve stabilization.
That bet is risky on two counts. First, we are betting that pretty much every renewable energy technology we have comes up sevens and can realistically be widely deployed at acceptable (meaning higher cost than present fossil fuel technologies but not so high as to cause very significant economic problems). And second that cap and trade along with efficiency regulations, portfolio standards, and modest subsidies will be sufficient to ensure that those technologies are broadly deployed.
I think the reality is that Romm recognizes that the scale of the challenge has grown substantially beyond what most of us imagined it was even a few short years ago. He has repeatedly suggested that we will need 12 to 14 wedges, not the 7 that S/P originally suggested would be necessary. And in the analysis we've been discussing he identifies 16 wedges. And we recognize the need to aggressively deploy existing technologies and support cap and trade and other regulatory policies to get them deployed.
But given that there is at least a significant possibility that we will need something more like 20 or 25 or even 30 wedges over the next four decades, a massive global R&D investment is at worst very good insurance and very possibly absolutely necessary to achieve climate stabilization. Moreover, given how uncertain we are about what the real deployed price of many alternative technologies are going to be, we would be well served to make a major investment in direct deployment of those technologies, rather than counting on indirect means, such as pricing and things like portfolio standards to get those technologies to market and scale, where the prices will start to really come down.
So here's the rub, Joe. We support cap and trade. We support pretty much every regulatory policy you've proposed. Do you support a massive federal investment in research, development, and deployment of clean energy technologies -- let's say $30 billion a year over ten years? Do you believe it should be a major priority of climate policy? Do you support dedicating all of the funds raised by federal cap and trade legislation to research, development, and deployment of clean energy technologies?