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Climate Change Legislation Will Create Surge in Energy Efficiency Programs, Report Says

May 2008 - Energy Efficiency

Reducing demand through energy efficiency measures could be responsible for 19 percent of emissions reductions required under the Lieberman-Warner Climate Security Act, a new report concludes, a move that highlights the increasing importance of energy efficiency programs in combating climate change.

he analysis, conducted by the International Resources Group for the Natural Resources Defense Council (NRDC), also found that reaching the targets can be done with minimal cost to our energy system, less than one half of one percent. IRG used a model of the U.S. energy economy developed by the Environmental Protection Agency to examine how the emission limits specified by the Lieberman-Warner bill can be achieved.

 “This analysis confirms that passing Lieberman-Warner will lead to increased energy efficiency, more electricity from renewables, and reduced oil consumption,” says Dan Lashof, director of NRDC’s Climate Center. “We have known for some time that a firm limit on global warming pollution with an accompanying market would produce jobs, provide manufacturing opportunities and spark innovation. This analysis confirms that we can do this with little cost to our energy system.”
The model calculates carbon dioxide allowance prices that rise steadily over time from $12 per ton of carbon dioxide  in 2020 to $20 per ton in 2030 and almost $50 per ton in 2050.
The US-NM50 MARKAL model used for the analysis found that the Lieberman-Warner emission limits could be achieved with contributions to global warming pollution reductions from the following sources (Case A):

-Electric demand reduction - 19 percent
-Renewable energy - 24 percent
-Carbon sequestration - 8 percent
-Domestic offsets - 13 percent
-International credits - 18 percent
-Nuclear power - 0 percent
IRG modelers also created a compliance pathway (Case B) that illustrates a future with major continued investments in coal generation, with more substantial reliance on CCS. In this case carbon sequestration contributes 19 percent of the emission reductions and the contributions from electric demand reductions and renewable energy are reduced somewhat.
“The analysis shows that companies that lead the transition to clean and efficient technologies will reap the benefits," says Pat DeLaquil, principal, Energy and Environmental Management Division, International Resource Group. “Furthermore, the analysis clearly demonstrates that if we as a society choose to actively promote a transition to technologies that reduce global warming pollution, the overall cost will be small.”
Under the Lieberman-Warner bill natural gas demand will decrease substantially as renewable electricity generation increases, according to the analysis.
Renewables will grow to between 50 percent and 60 percent of total electricity supply. In this model, renewables are a mix of biomass, geothermal, concentrating solar power, solar photovoltaics and wind technologies. The two main contributors to renewable electric output are large, remote wind farms and concentrating solar power.  
The analysis was performed using a version of the U.S. national MARKAL model (US-NM50) originally developed by the Environmental Protection Agency’s Office of Research and Development.  The model covers the period from 2000 to 2050 and is calibrated to 2000 and 2005 historical data. The starting point for the analysis is a business-as-usual scenario that tracks closely to the Department of Energy’s Annual Energy Outlook 2008 for the 2010 to 2030 period. This analysis focuses on emissions of carbon dioxide.


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