Monday, June 18, 2007

Global Energy Decarbonization

Last week I had the opportunity to hear Professor Jeffrey Sachs address a small “new energy” gathering hosted by Merrill Lynch in Manhattan. Dr. Sachs, who heads the Earth Institute at Columbia University, spoke about reducing greenhouse gas emissions, and I was impressed by his authoritative command of a subject that’s at least somewhat removed from his primary expertise in global development. But then, climate change could prove to be the ultimate global development issue, in terms of its potential impact and of the opportunities its solutions could create.

Dr. Sachs began by briefly reviewing the evidence for anthropogenic global warming and projections of its future progress. He made a strong case for the need to reduce humanity’s emissions of greenhouse gases--especially carbon dioxide--expeditiously, and for why that won’t happen without a serious and intentional global effort. The bulk of his remarks focused on the policy and technological tools required to stabilize atmospheric CO2 emissions between 450 and 560 parts per million (ppm), and preferably at the lower end of that range.

On the technology front, Professor Sachs expressed doubts that renewable energy and improved efficiency by themselves will deliver the energy sector emissions reductions that will be necessary in the next several decades. Based on his work with these countries, he sees the growth of China and India continuing to be fueled largely by coal, and for that reason regards carbon capture and sequestration (CCS) as “the indispensable technology” for achieving meaningful CO2 reductions from fossil fuels. When I expressed my concern, prompted by the recent MIT Future of Coal study, that the challenge of retrofitting CCS to existing power plants has been underestimated, he cited modeling work at the Earth Institute showing that even if applied only to new construction, CCS could reduce CO2 emissions from the power sector to very low levels by 2050, provided old plants were retired after 40 years.

The most interesting discussion, from my perspective, centered on the policy recipe for inducing sufficient emission reductions across the global economy. Dr. Sachs was optimistic about the prospect of achieving a follow-on agreement to the Kyoto Protocol among all of the large emitters, including China and the US, by 2009 or 2010. At the same time, he seemed quite skeptical about the practical aspects of a cap-and-trade mechanism, but stopped short of endorsing a simple carbon tax, because of the enormous financial transfers that would entail. He seemed to prefer a more flexible approach, tailored to each country’s situation and incorporating a mix of carbon pricing, mandates and performance standards for specific industries. (Something like that could be very compatible with the “stabilization wedge” approach proposed by Robert Socolow of Princeton.)

I thought the most reassuring element of the whole conversation wasn’t in the technical or policy details, but in Dr. Sachs’s conclusion that greenhouse gases can indeed be stabilized at a cost that won’t wreck the global economy, perhaps less than 1% of global GDP. When I hear that from climate scientists or politicians, I take it with a grain of salt. But coming from someone who has devoted his career to advancing the cause of economic growth and the extension of its benefits to the world’s poor, it gives me more confidence that taking action to retard climate change--in spite of the residual uncertainties--represents the right cost and risk trade-off.

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