Daniel Englander
The Morning Feedstock: June 6, 2008 June 6, 2008 at 5:06 AM
The International Energy Association released a report yesterday calling on governments to start a $45 trillion “energy technology revolution”, arguing it’s the only way to halve CO2 emissions by 2050. This is equivalent to transferring 1.1 percent of global GDP towards green technology over the next 40 years. However, IEA director Nobuo Tanaka argues the spending would be “a re-direction of economic activity and employment, and not necessarily a reduction in GDP.” The 643 page report, which the G8 commissioned in 2005, is nothing if not ambitious in its proposals. For example, in order to cut carbon emission by 50 percent, 17,500 wind turbines and 32 nuclear plants will need to built every year, while 35 coal fired power plants will require CCS technology, and one billion EVs and FCVs will need to find their way to the road. To incentivize this this level of technology development, global carbon prices would need to rise from their $42 per ton level to somewhere between $200 and $500. Go Hibinho, a manager at Mizuho Information & Research said, “carbon emissions must be cut. Costs of about 1 percent of GDP are not outrageous, so this target is realistic.”
As UN member countries gather in Germany this week to hash out details for an extension of the Kyoto Protocols, they will no doubt look to this report for guidance. And they will find more support from this stack of paper than from the whole of the United State Congress. On Wednesday Senate Republicans pushed ahead with a procedural stalling tactic to have the entire Warner-Lieberman climate change bill read aloud on the Senate floor, killing debate on the bill. Senate Democrats are expected to attempt to end debate on the bill and bring the legislation to a vote this morning. Despite some of the bill’s failings, including its proposal to give away emissions credits, that it now appears Democrats overstated the amount of support the climate change would receive. While expectations for passage were low, and a veto expected, the failure to commence with substantive debate on the bill is pathetic. That Republicans apparently used the opportunity to get back at Democrats for stalling on judicial nominations is embarrassing. That Duke Energy and other power companies failed to support this bill is hypocritical. That the Wall Street Journal editorial page continues to take a stance based in economic fiction instead of economic fact against substantive climate change legislation is shameful.
Spanish utility Iberdrola has launched an ad campaign aimed at convincing New Yorkers that letting it buy Energy East, a local utility, for $4.5 billion is a good idea. Included in the $4.5 billion would be a $2 billion investment aimed at developing wind turbine capacity in the state. The windy commitment is part of a larger strategy to convince the New York State Public Service Commission to approve the sale. The PSC has stalled for months on approving the deal, despite it receiving approval from FERC and regulators in other states. It appears Iberdrola’s is committed to seeing the deal through. At the heart of the fight is the PSC’s demand that Iberdrola divest ownership of the bundled power system - generation, transmission, and distribution - it would acquire through the purchase. The PSC claims this violates New York State law on vertically integrated power companies, a law that was enacted during widespread deregulation in the 1990s. Sen. Charles Schumer disagrees with this request, saying unbundling has not helped to reduce electricity prices. Regardless, Iberdrola has committed to subsidizing rate payer increases by more than $200 million. The PSC has asked Iberdrola to up this commitment to $644 million, and then also to see how many times it can punch its fist into the wall before it bleeds.
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