– John Kemp is a Reuters columnist. The views expressed are his own –

Energy efficiency will have to make the single most-important contribution if policymakers are serious about limiting greenhouse gas emissions and dampening growing demand for fossil fuels.

Energy efficiency will not remove the need to invest in large volumes of wind, solar and nuclear generation, or in technology for carbon capture and storage, but it does form the third leg of the triad.

In the United States, nowhere have efficiency initiatives been given higher prominence and become as deeply entrenched in the public policy process as in the state of California. In response to a series of power crises, the state has adopted some of the toughest standards anywhere in the world.

The 1974 Warren-Alquist Act, signed by then-governor Ronald Reagan, created the State Energy Resources Conservation and Development Commission, now renamed the California Energy Commission (CEC), with a mandate to develop minimum efficiency requirements for new construction and appliances.

Efficiency improvements have been enforced through a strict standard-setting process.

Title 24 of the state code of regulations prescribes detailed requirements for all new buildings and major redevelopments in the state. Title 20 establishes standards for appliances sold to in-state customers, including heating and cooling systems, lighting units and refrigerators. Both have been repeatedly tightened to require higher levels of efficiency.

The objective is to limit the need to build new generation and transmission capacity by cutting electricity consumption in heating and lighting applications.

Measuring the amount of generation and greenhouse emissions avoided this way is difficult since it involves a counterfactual — comparing the amount of energy actually used and the amount that would have been needed in the absence of conservation measures — which can never be known for certain.

But by any yardstick, the amount of generating capacity and greenhouse gas emissions avoided by these “negawatts” has been substantial.

THE ART OF ENERGY EFFICIENCY

Prior to 1974, California’s installed generating capacity was 30 Gigawatts (GW) and growing 6 percent per year, with more than half the annual increase required to supply new homes and buildings.

California Energy Commissioner Art Rosenfeld, one of the godfathers of the efficiency movement, claims Title 24 building standards cut energy use per square foot for heating and cooling in new buildings by 50 percent in the ten years between 1975 and 1985. A decade later savings had avoided the need to build 2.5 GW of new generation.

Rosenfeld claims even larger success for standards to improve domestic refrigerators. Progressively tighter state and federal regulations for new appliances, as well as improvements in technology, have cut annual energy consumption from an average of 1800 kilowatt hours (KWh) in 1974 to 450 kWh in 2001.

Consumption has been cut even as the typical refrigerator’s volume has grown 10 percent from 18 cubic feet to 20, making a compound efficiency gain of 5 percent per year.

Rosenfeld estimates the amount of energy saved, in California and now nationwide as standards have been adopted at federal level, is equivalent to around 50 GW of generating capacity (see the diagram on page 48 of Rosenfeld’s famous paper on “The Art of Energy Efficiency”.

CPUC ADOPTS AMBITIOUS TARGET

The drive to reduce power consumption has accelerated following the state’s devastating power crisis in 2000-2001.

“Energy efficiency is the first priority in California’s loading order for energy resources” (ahead of solar, wind, nuclear or fossil fuels) according to the California Public Utilities Commission (CPUC), which regulates electricity rates charged by investor-owned utilities (IOUs) in the state.

CPUC has now included energy efficiency objectives in its IOU rate-setting process. Utilities receive an increase in the rate charged per kilowatt hour in return for meeting certain load-reduction targets.

CPUC has adopted targets that would cut peak generation about 450-500 MW per year between 2006 and 2013. Assuming they are met, California’s four IOUs would avoid the need for around 4 GW of generating capacity by the end of 2013 (roughly four large nuclear or coal-fired plants)

For comparison, the Western Interconnection, of which California is the largest component, has around 178 GW of generating capacity at present, so the avoided capacity would be equivalent to around 2 percent of all generating capacity on the western power grid.
CASH FOR CLUNKERS, REDUX

California’s approach is now being adopted by the Obama administration (Energy Secretary Steven Chu is a self-described “energy efficiency nut”).

The administration has already run a cash-for-clunkers programme to provide a boost for automakers while giving customers an incentive to retire older, less efficient vehicles in favour of modern cars that achieve higher mileage per gallon.

But the American Recovery and Reinvestment Act also provides $296 million of funding for State Energy Efficiency Appliance Rebate Programs (SEEARP) — a cash-for-clunkers system to replace aging clothes washers, refrigerators and room air conditioners with more energy efficient versions.

California’s share is $35 million, and the state proposes to make rebates available for purchases made during a one-month period from March 17 and ending on April 22, 2010. Rebates will be offered for 125,000 washing machines, 150,000 refrigerators and 100,000 air conditioners.

“COMFORTABLE CONSERVATION”

Rosenfeld has calculated that the amount of energy used to produce a dollar of GDP fell by a factor of 4.5 between 1845 and 1998, after adjusting for inflation, a compound annual improvement of 1 percent, driven by market forces.

But the average concealed substantial variations. Conservation rose to as much as 4 percent per year following the first oil shock, until real oil prices fell in the late 1980s and through the 1990s, slowing the pace of improvement.

If the rate could be raised to 2 percent per year — double the long-term average but just half the rate achieved after the first oil shock — energy consumption per unit of output could be cut by two-thirds in just over 50 years.

“Comfortable conservation” (getting the same quality of heat, light and output for a fraction of the energy by reducing waste) is now the central objective for the coterie of physicists advising the White House, and is likely to be one of the central policy themes over the remaining years of the Obama administration.

Such gains are perfectly feasible. U.S. motor manufacturers achieved even larger improvements in engine efficiency in the early 1980s, though the gains were used to build larger and more powerful vehicles rather than reduce fuel consumption.

The real prize, however, is in the emerging markets, where most appliances and buildings still operate at just a fraction of the efficiency of their advanced-country counterparts, and where the scope for efficiency gains is huge.

In effect, the only way to continue raising living standards, especially in developing countries, while limiting emissions is to take the success achieved in California refrigerators and replicate it across all the other energy-consuming sectors on a worldwide scale.

- John Kemp is a Reuters columnist. The views expressed are his own --

As hopes for reaching a binding agreement to cut greenhouse gas emissions at the Copenhagen summit die, climate negotiators could learn useful lessons on how to structure the negotiations from the multiple rounds of trade talks within the GATT/WTO framework.

Climate negotiations are about limiting carbon dioxide emissions, but the negotiators are also hammering out a complex economic instrument that will define the distribution of production, energy use and income in the next few decades. It is the agreement's profound economic effects that are making it so hard to reach a final deal.

While the stalled negotiations on the Doha Round might make it seem likely an unlikely role model, the GATT/WTO process has successfully created a legal framework for liberalising world trade through eight successive rounds of increasingly complex negotiations, as well as a dispute settlement system accepted by all major countries.

In the process, negotiators have already had to resolve many of the difficult issues bedevilling attempts to reach an emissions deal:

* How to obtain treaty commitments from a huge range of countries at different stages of economic development.

* How to handle negotiations with the United States, given the peculiar nature of that country's constitutional arrangements.

* How to ensure countries live up to their commitments and resolve subsequent disputes about treaty implementation.

Climate negotiators could usefully apply many of these lessons to their own agreement. As Copenhagen falters, they may need to rethink the "road map" for talks to improve the chance of bringing them to a successful conclusion.

FRAMEWORK AND DETAILED SCHEDULES

The 1947 General Agreement on Tariff and Trade (GATT) established a legal framework and general principles for trade liberalisation. But detailed tariff reductions as well as commitments on subsidies, dumping and technical barriers were left to a later series of trade rounds. These commitments were then turned into schedules of concessions for each member country and incorporated by reference into the central treaty.

Negotiations started with a series of limited tariff reductions that were gradually made more ambitious. Part IV of the GATT, added in 1966, guaranteed developing countries "special and differential treatment" to encourage them to become involved in the tariff-reduction process and make their own binding commitments.

For each round, political leaders set broad objectives at the outset, but the detailed exchange of "concessions" was handled by lower-level officials in a Trade Negotiations Committee (TNC).

Something similar is needed for the climate talks. President Barack Obama has already backed a "two-step" process. Political leaders would aim for an "operational agreement" at next month's summit while leaving a legally binding agreement until 2010 or later. [ID:nSP280582] The aim is to ensure agreement on the big issues is not held hostage to myriad disputes over the details.

It might make sense to separate an agreement on the broad framework (including establishment and review of targets, trading emissions allowances, technology transfer, funding, and dispute settlement) from the details (including specific reduction targets and how much developed countries pay their developing counterparts to help mitigate the costs of technology upgrades).

It might also make sense to agree fairly easy reductions in the first round, then hold further negotiations in coming years to make targets more ambitious, using salami-slicing tactics rather than a big-bang approach. This would also allow developing countries to adopt modest emissions cuts in round one, with the aim of toughening them further in subsequent talks.

But for a two-step process to work, political leaders must give clear instructions to lower-level officials responsible for detailed negotiations (including clear scope for eventual concessions). If not agreement will become bogged down over relatively small differences in percentage reductions, as the Doha Round has become stalled over farm subsidies and tariff cuts for developing countries.

THE PROBLEM OF SENATE RATIFICATION

Trade negotiators are already used to the idea that an agreement is subject to a "double lock." Deals require approval at international level and by the U.S. Congress (either by a two-thirds majority in the U.S. Senate if the deal is presented as a treaty, or a simple majority in both houses if the deal is presented as ordinary legislation).

The existence of this double lock confers an advantage on the United States since other countries have to negotiate twice -- once with the administration and then again with Congress. Having given one set of concessions to the president's officials to secure a deal, other countries may have to make even more concessions to get the deal approved by U.S. legislators.

To encourage countries to make meaningful concessions without fear the final deal will be re-opened, U.S. presidents have often been required to obtain "fast-track" negotiating authority binding Congress to a straight up-or-down vote within a set time on the results of a trade round.

Negotiations are usually structured as a "single undertaking" in which every commitment or concession is part of a whole and indivisible package and cannot be agreed separately: "nothing is agreed until everything is agreed."

In terms of sequencing, trade negotiators have usually sought to reach an international agreement first and then presented the deal for congressional approval.

Until now, the climate negotiations have been using the opposite approach. The Obama administration has sought to obtain an ambitious climate bill including cap-and-trade from Congress (HR 2454, S 1733) and then use this to persuade developing countries such as China to offer significant emissions reductions at the international level.

But experience with trade negotiations suggests that an international deal precedes U.S. action, and does not come after it. It is unlikely Congress will agree to stringent targets without some assurance other countries will follow suit, including large future emitters such as China and India. So the international track may need to move first, or at least in parallel.

The Obama administration needs to harvest a number of provisional commitments from its international partners to have any hope of getting a climate bill through the Senate. If it is structured as a single undertaking, the various parties would offer tentative commitments. Once a deal is done, it would be taken back to the Senate to be incorporated into U.S. law.

The only question is whether the president would need to obtain some sort of fast-track authority. This is probably not necessary as long as the president's Democratic Party controls both houses of Congress with comfortable majorities.

But it does set a deadline for a deal. Negotiators would need to reach agreement by next summer, well ahead of the 2010 mid-term elections, unless the Democratic Party appears on course to retain comfortable majorities, in which case negotiations could take longer and still reach a successful conclusion.

DISPUTES, NULLIFICATION, IMPAIRMENT

U.S. lawmakers are already suspicious that other countries will not adopt meaningful targets or will cheat on those they do agree. So any climate deal will need a mechanism for settling disputes. If not, countries are likely to retaliate unilaterally against partners they believe are not living up to their commitments, which could unravel the whole system.

From the beginning, GATT Article XXIII allowed a country to request formal consultations with another treaty member if it believed expected benefits under the agreement were being "nullified or impaired," and this has been worked up into an increasingly formal and effective dispute settlement system.

If emission targets and aid packages are structured as part of a mutual exchange of concessions among treaty signatories, so one country's targets are conditioned on other countries meeting their own, the climate treaty will need a similar dispute mechanism.

Rather than attempt to create one from scratch, it would probably be better to use the WTO system as a template and modify it to take account of the climate accord's unique characteristics.

– Nancy Birdsall is the president of the Center for Global Development. Arvind Subramanian is a senior fellow at the Center and at the Peterson Institute for International Economics and a regular columnist for the Business Standard, India’s leading business newspaper. The views expressed are their own. –

Efforts to cut emissions of the heat-trapping gases are gridlocked over a misunderstanding about what is fair. This misunderstanding is hindering climate change legislation in Congress and threatens to torpedo international negotiations in Copenhagen next month.

We propose a new way of thinking about climate fairness that focuses not on emissions cuts but on meeting developing countries’ energy needs in a climate-friendly manner. This simple narrative can provide a framework for U.S. legislation and open the way for international collaborative efforts to avert climate catastrophe.

At present, many people in the United States focus on the large and growing emissions of the developing world, especially China, which in absolute terms is now the world’s largest source of greenhouse gases, and India, which is growing fast and like China relies heavily on coal. They argue that it would be unfair to force emissions cuts at home without similar cuts in developing countries. A recent poll found that 60% of Americans believe that in any climate agreement China should cut its emissions the most.

It is true that developing countries already account for roughly half of all greenhouse gas emissions, and that their large populations and rapid economic growth are boosting emissions fast enough to create a planetary crisis by 2050-even if today’s rich countries had never existed.

But meanwhile a quarter of humanity — including millions in China and India — live without any electricity, and one-in-three people on the planet rely on straw, brush, charcoal and animal dung for their cooking needs. The resulting indoor air pollution kills 1.5 million people a year — about 4,000 per day — mostly children. Power for small businesses, irrigation networks, clinics and schools is sorely lacking.

Developing countries point to these unmet energy needs and to large disparities in per capita emissions to argue that the rich world must move first. They note that the 20 tons of CO2 that Americans emit annually is five times the world average, well above both China (5 tons per capita) and India (below 2 tons per capita).

They see emissions as inseparable from economic growth and argue for the developing world’s “right to pollute.” Some argue that because most of the extra heat-trapping gasses in the atmosphere were put there by the United States, Europe, and other industrialized countries, wealthy nations should pay “reparations” for the damage inflicted on poor countries.

Rarely in history have we seen constructive solutions come out of such blame games.

We believe that both sides should shift their focus from negotiated emissions cuts to a joint effort to find ways to rapidly meet the developing world’s legitimate energy needs at low cost in a carbon-constrained world. How can we change to this mindset, adopt a story line that would lead ordinary people in rich and poor countries, and the politicians and negotiators who do their bidding, to do the right thing?

Wealthy nations, starting with the United States, should affirm that, for any given income, people in developing countries have the same rights to energy-based services as those in the rich world-and then offer to help them obtain those energy-based services at the lowest possible cost and with the lowest possible CO2 emissions.

This should apply not only to existing technology, but to a war-footing approach to the development and deployment, at home and abroad, of new emissions-reducing and efficiency-enhancing technologies — solar, wind, tides, algae-based biofuels, smart grids and buildings — similar to the technology push of World War II.

The long-overdue climate speech by President Obama, explaining why action is urgently needed and why the U.S. must lead, would be a good place to start, and could help to open the way for progress in Congress and in Copenhagen.

For their part, developing countries should stop talking about a “right” to emit CO2, emissions are after all merely a waste product. Instead, they should insist on their right to energy-based services appropriate to their level of development — to light, and heat, and refrigeration, for starters, and then, as per capita incomes rise, to elevators, climate-controlled homes and workplaces, computers and, yes, flat-screen TVs.

To make this level of energy services possible without destroying the planet, developing countries should press the rich world for massive public funding of green energy research, and for full and rapid access to all resulting new technologies.

Framed this way — in terms of a U.S.-led push for equality of energy opportunity — it’s hard to see how Americans and others in the rich world could fairly object. We think they would agree, because it’s the fair thing to do and because it’s in their own best interest.

– John Kemp is a Reuters columnist. The views expressed are his own –

Resounding defeats for Democratic Party gubernatorial candidates in Virginia and New Jersey on November 3 have killed any lingering hope Congress will enact climate change legislation this year, and may doom the prospect of passing a cap-and-trade bill this side of the 2010 mid-term elections.

Prospects for eventually passing legislation may now depend on winning Republican support with nuclear loan guarantees and more offshore drilling.

While the president remains personally popular, with high approval ratings, and does not need to face the voters again for another three years, 16 Democratic senators and 256 Democratic members of the House of Representatives will be on the ballot in November 2010.

The Virginia and New Jersey off-cycle elections are often idiosyncratic. But crushing defeats for Democrats at the top of the ticket in both states are already sparking a bout of soul-searching over the lessons that need to be learned if the party is to retain firm control of both houses of Congress next year.

What worries many Democrats is that turnout among the young voters who helped propel them to victory last year fell away sharply, self-identified independents broke heavily for the Republican candidates; and voters overwhelmingly cited the economy and jobs rather than healthcare or climate change as their major concern in exit polls.

Democrats face the classic dilemma for any party after a defeat — press ahead trying to enact a difficult agenda or pull back, re-focus on simpler and less controversial measures.

The White House insists both defeats were due to local factors (a poor candidate in Virginia, a souring economy in New Jersey) and will not change the president’s determination to press ahead with an ambitious domestic agenda centered on healthcare reform and climate change.

But the party’s congressional wing is divided. Liberals (mostly from safe seats at little risk next year) argue the administration and party should press ahead; voters will rally behind a record of accomplishment next year. Moderates and conservatives (mostly from swing seats or those carried by John McCain in 2008 or George W Bush in 2004) as well as those from heavy industrial states are pressing to scale-back and refocus on cutting unemployment.

In this context, it seems unlikely the administration can find the 60 predominantly Democratic votes it needs to pass a climate bill on the floor of the Senate; hammer out a compromise between the differing House and Senate versions in conference; then secure simple majorities in both houses to pass the agreed bill into law.

Even before this week’s election results, the prospects for passing climate change legislation this year were dimming rapidly. But the arithmetic, already challenging, has now become very tricky as the administration loses momentum.

60-VOTE DOUBT IN SENATE

In the Senate, only two Democrats are up for re-election in Republican-leaning states carried by John McCain (North Dakota’s Byron Dorgan and Arkansas’s Blanche Lincoln).

Both have already taken a cautious approach to climate legislation. Both broke ranks with the majority of their colleagues earlier this year to vote for a Republican amendment preventing the budget reconciliation process being used to push through cap-and-trade on a 51-vote straight majority rather than the 60-vote super-majority normally needed to end a filibuster.

But the party remains ambivalent over cap-and-trade, split between liberals from coastal states who want a commitment to tough emissions reduction objectives, and senators representing industrial areas or conservative states anxious about supporting anything that could be portrayed as a costly, job-killing energy tax by their opponents at election time.

In theory, the Democratic Party (together with its independent allies) has the 60 votes needed to push a climate bill through despite almost uniform Republican opposition. In practice, the party broke 26-31 in favor of the Republican amendment to the budget resolution earlier this year, in what many saw as a straw poll on cap-and-trade.

Some Democrats have fallen into line since then, and the administration may be able to pick up one or two Republican votes such as South Carolina’s Lindsey Graham with the promise of loan guarantees and other government help for the nuclear power industry.

With several Democrats harbouring concerns, though, there are not yet 60 votes for an ambitious climate bill.

The bill will not be openly defeated on the Senate floor. If it dies or gets delayed it will be in the cloakroom. Majority Leader Harry Reid will not bring it up for a vote unless and until 60 firm votes are in his pocket. So Democrats with doubts will be able to delay the bill indefinitely by holding out and asking for more concessions, without having to come out explicitly against it.

RISK OF REVERSAL IN HOUSE

The arithmetic looks as daunting in the House of Representatives. While the lower chamber has already approved its own climate bill (HR 2454) legislators will have to vote again to pass the consolidated version if and when it is agreed in conference.

There is nothing to stop congressmen changing their minds. As the election draws closer and the already bitter partisanship in the chamber intensifies, some of the bill’s earlier supporters may withdraw.

The original bill passed only by the narrowest of margins (219-212), with 44 Democrats voting “No.”

A total of 84 Democrats represent Republican-leaning districts carried by John McCain or George W Bush in 2004. It will take only a handful of further defections to sink the measure if it returns from conference.

If the consolidated bill has been toughened in line with the Senate version (S 1733), congressmen will have a ready-made excuse to claim it has gone too far.

Parties controlling the White House usually lose seats at the mid-term elections, so pressure on Democrats in Republican-leaning areas will be immense.

The party’s heavy losses in Virginia and New Jersey this week will make them very cautious.

CROWDED AGENDA, LOSING MOMENTUM

Arguably, the president has tried to push through too many ambitious reform proposals and stretched his political capital too thinly.

At the best of times, it would be difficult to get either healthcare reform or climate change through Congress when the president’s majority is an uneasy coalition of liberals and centrists. But when the president is having to deal with a recession, financial regulation, and whether to increase the military commitment to Afghanistan, it has proved impossible to rally support for them both at the same time.

Hopes that healthcare and climate change legislation could be rammed through early in the year, long before the mid-term elections, while the Republican Party was still consumed by infighting after losing heavily in 2008, have evaporated.

Climate change has become a second-order priority. The political capital needed to assemble winning coalitions for a bill in both chambers is being deployed elsewhere.

The best option for the administration may be seeking to broaden its coalition, buying more Republican support through a combination of nuclear financing guarantees and greater access to offshore drilling.

But if an agreed climate bill does not go through before the year end, its prospects next year, when legislators will be fixated on the looming elections, are no better.

Even if a deal is reached among political delegates at the upcoming United Nations Climate Conference in Copenhagen, it is unlikely to set out specific emission targets, says Mike Hulme, author of "Why We Disagree About Climate Change" and a professor at the University of East Anglia in Norwich.

"What we've done with climate change is to attach so many pressing environmental concerns to the climate change agenda that trying to secure a negotiated multilateral agreement between 190 nations is actually beyond the reach of what we can achieve," he argues.

Hulme, who will take part in a debate hosted by the Institute of Economic Affairs in November about carbon emission policies and economic activity before he heads to the Copenhagen conference, discussed his views with Reuters.

It looks more like an Ice Age than global warming.

There is so much snow in Oslo, where I live, that the city authorities are resorting to dumping truckloads of it in the sea because the usual storage sites on land are full.

That is angering environmentalists who say the snow is far too dirty -- scraped up from polluted roads -- to be added to the fjord. The story even made it to the front page of the local paper ('Dumpes i sjøen': 'Dumped in the sea').

In many places around the capital there's about a metre of snow, the most since 2006 when it was last dumped in the sea. Extra snow usually gets trucked to sites on land, where most of the polluted dirt is left after the thaw. Those stores are now full -- in some the snow isn't expected to melt before September.

But are these mountains of snow a sign that global warming isn't happening?

Unfortunately, more snow might fit projections by the U.N. Climate Panel, which says that northern Europe is likely to get wetter and the south drier as temperatures rise this century.

"By the 2070s, hydropower potential for the whole of Europe is expected to decline by 6 percent, with strong regional variations from a 20 to 50 percent decrease in the Mediterranean region to a 15 to 30 increase in northern and eastern Europe." it said in a 2007 report (page 60 of this link).

So people in northern Europe may have to buy more snow shovels than parasols to cope with global warming?

How about where you live?