GHG Mitigation Policy Analysis

In crafting GHG mitigation programs, decisionmakers are challenged with balancing many factors. At the highest level, they need to balance the need for significant emission reductions with the need for a healthy economy. The decision factors are complex, and involve cost-effectiveness, equity across the various emitting sectors, implementation and compliance issues, uncertainty, trade effects, and selection and design of policy instruments (e.g., cap and trade systems, voluntary programs).

By virtue of ICF’s experience supporting mitigation strategies that range from individual sectors (e.g., the Regional Greenhouse Gas Initiative, which focuses on the power sector) to fully integrated, multi-sectoral approaches (e.g., Canada’s National Round Table on Economy and Environment strategy for deep, long-term emission reductions), we provide decisionmakers with sound analysis that supports a credible, transparent, fair, and scientifically defensible result.

Among the other advantages of choosing ICF are:

• We understand which key factors vary on a regional basis, and how to take advantage of this geographic texture.
  
  
• We have expertise in all of the key sectors—transportation, electric power, energy efficiency (commercial, residential, industrial), industrial processes, waste management, agriculture, and forestry.
  
  
• We have the capability to integrate GHG mitigation analysis with evaluation of conventional air pollutants. Many of the emission reduction measures deliver substantial “co-benefits” in terms of reducing local and regional air pollution.
  
  
• We are developing a multi-sector modeling capability that allows integrated analysis of all energy sectors, with feedback to regional economic models. We are currently using this integrated approach for projects in Ontario, Canada; Illinois; and California.

Selected Projects

Sectoral Approach to a Post-Kyoto Agreement. In partnership with the Center for Clean Air Policy, ICF is undertaking analyses to assess the potential for key developing countries to participate in international efforts to curb climate change via a sectoral approach to a post-2012 agreement. The project involves implementing bottom-up analyses on a plant-by-plant basis to construct emissions intensity estimates for a baseline and five alternative scenarios for the iron and steel, cement, aluminum, and electricity sectors in Brazil, China, and Mexico. Other project activities include identifying domestic sources of abatement technologies, estimating potential international funding requirements, and forecasting carbon prices that will be used to estimate the potential value of emission reduction credits that these countries might be able to sell in international markets. In addition, ICF is tasked with identifying capacity building needs in each of the countries and sectors required for successful participation in an intensity-based commitment and providing analysis and design recommendations for an implementation strategy in each of the countries. An integral part of this work entails engaging local stakeholders in a consultation process and thus in-country workshops and consultations with government, industry, academic, and other parties with a stake in the outcome of the process.

Multi-Sector GHG Reduction Analysis. ICF continues to conduct multi-sector analysis of multiple U.S. legislative proposals introduced in Congress to reduce GHG emissions on an economy-wide basis. Issues examined include the scope of the coverage—for example, which sectors are included under a cap-and-trade mechanism vs. which are left out; how the reduction targets are defined; the allowance for both domestic U.S. and international offsets, as well as the cost and availability of those offsets; which sectors will be called upon to make the most reductions and the associated cost and availability of reduction options across various sectors including the power sector, transportation, and the residential, commercial, and industrial sectors. Also evaluated are the potential interactions with other international markets such as the EU Emission Trading Scheme (ETS). Results of this analysis include forecasts of CO₂ prices and impacts of these prices on natural gas prices, electric sector capacity expansion, and plant dispatch decisions, as well as the relative contribution of other sectors to meeting wide and deep emission reduction targets. Macroeconomic impacts are also being analyzed.

Regional Greenhouse Gas Initiative (RGGI). ICF recently completed the electric sector analysis for the RGGI, a coalition of 7 (previously 9) states in the northeast and mid-Atlantic that are pursuing the implementation of a regional greenhouse gas reduction strategy. Using the Integrated Planning Model (IPM®) modeling framework, ICF examined and quantified a series of proposed policy measures intended to reduce CO₂ emissions from the power sector in the region. Integral to this analysis was a detailed treatment of the renewable resource cost, performance and availability in the northeast and mid-Atlantic, and how renewable portfolio standard requirements would interact with conventional wholesale power markets and impact the CO₂ emissions trajectory in the region.

Clean Energy Group 4-Pollutant Analysis. ICF conducted an analytical effort to specify and model the impact of a series of proposed multi-pollutant emissions regulatory scenarios on the electric power sector. This work was conducted for the Clean Energy Group consortium of utilities. The results of that effort were incorporated by the Clean Energy Group into the Clean Air Planning Act initially introduced in 2002 and reintroduced in 2003 by Senator Carper of Delaware. This analysis was conducted using ICF’s proprietary IPM® modeling system.

Connecticut’s Greenhouse Gas Reduction Initiative. ICF conducted the electric sector analysis for the State of Connecticut’s GHG Stakeholder’s Group to examine and quantify a series of proposed policy measures intended to promote renewable power development and reduce CO₂ emissions in the Connecticut and larger northeastern region. Additional scenarios that examined the role of distributed generation and load management were also evaluated. The electric sector modeling performed for the group was used to assist the larger Greenhouse Gas Task Force to finalize its policy recommendations to the Governor at the end of 2003

New York Greenhouse Gas Policy Assessment. In support of New York Governor Pataki’s Greenhouse Gas Taskforce, ICF conducted an analysis of the impacts of CO₂ and renewable policy measures on the electricity generation system in New York and the neighboring regions. The analysis was conducted using IPM®. ICF worked with the Taskforce participants to develop assumptions for the IPM® modeling analysis to reflect the power generation system, fuel markets, and the renewable potential in New York. Eight policy scenarios for the IPM® analysis were developed with inputs from the Taskforce’s Electricity Working Group members. The scenarios represented combinations of policy variables, including alternative carbon cap levels, alternative geographic scopes of CO₂ caps, energy efficiency penetration, and implementation of a renewable portfolio standard. ICF produced results that included forecast emissions levels, power prices, renewable power premiums, and the impact on the relative competitiveness of New York generators under the difference scenarios.

Analysis of the Potential and Costs for Greenhouse Gas Emission Reductions in New Zealand for the New Zealand Ministry for the Environment. ICF developed abatement supply curves for key sources of greenhouse gas emissions in New Zealand. In particular, ICF assessed mitigation options for reducing carbon dioxide (CO₂ ), methane (CH₄), nitrous oxide (N₂O), and perfluorocarbons (PFC) emissions from the following sectors: public electricity and heat production (including commercial and residential energy use); petroleum refining; natural gas venting and flaring; road transportation; iron and steel production; aluminium production; enteric fermentation; agricultural soil emissions from cropland pasture, range, and paddock manure; and landfills. The approach provides a consistent framework for comparing the potential and costs of mitigation options across sectors. The analysis uses baseline emissions from 1990 through 2020 under a “no further regulatory action,” scenario and emission reduction options are evaluated for 2010 and 2020 across multiple discount rates and tax rates. The Ministry for the Environment will use the results for developing climate change policies.

Climate Change Strategy Modeling for the State of Illinois. Governor Rod R. Blagojevich established the Illinois Climate Change Advisory Group (ICCAG) with a mandate to develop a plan to reduce greenhouse gas emissions to 1990 levels by 2020 and to 60 percent below 1990 levels by 2050. ICF supported the ICCAG in modeling the energy, emissions and economic implications of proposed mitigation policies across all economic sectors. After developing a baseline of expected emissions for the state, more than 20 policies were modeled, including cap-and-trade scenarios with and without links to regional carbon trading systems. Emissions and economic implications were modeled both for the state and at the regional and national levels. As the graph above illustrates, the modeling results indicated that the policies proposed by the ICCAG could achieve the Governor’s 2020 target with a modest positive impact on the state economy.

Modeling Global Warming Policies for the State of Wisconsin. ICF was retained by the State of Wisconsin to provide modeling support for the Governor’s Global Warming Task Force using the ENERGY 2020 model. Working with the Task Force and its Technical Advisory Group, this project has developed a detailed Reference Case of energy use and emissions in Wisconsin. The model is currently being modified to incorporate salient elements of the 2007 Energy Independence and Security Act. ENERGY 2020 will then be used to model up to 30 different policies approved by the Task Force in 10-15 policy packages in order to determine the impacts on energy, emissions, and the economy.

Modeling Policy Scenarios for Reducing Electricity Sector Emissions for Environment Canada. Environment Canada was interested in developing alternative tools and a multi-sector approach to assist in evaluating options for reducing air pollution and greenhouse gas emissions from the electricity sector. The project was intended to evaluate regulatory approaches, such as command-and-control and cap-and-trade schemes for CO₂, SO₂ and NO_x emissions. Environment Canada also wanted to evaluate the beneficial impacts of such strategies on associated mercury and particulate matter (PM) emissions. Using the ENERGY 2020 model, ICF analyzed the impacts of a number of policy scenarios. SO₂ and NO_x were based on hard caps while CO₂ caps were based on an energy intensity approach. Environment Canada developed 25 policy scenarios for modeling and analysis. The policy cases tested a range of different possible standards for CO₂, SO₂ and NO_x emissions with different timing for implementing these standards. ENERGY 2020 was used to model variations in the allocation schemes and offset and trading rules associated with possible regulatory designs.

Climate Change Modeling and Policy Advise for the Ontario Ministry of the Environment. The current Ontario government has taken a number of actions to improve the environment and encourage a “culture of conservation” and deployment of renewable energy within the province. ICF was retained to assist the Ministry in quantifying the impacts of these changes on greenhouse gas emissions and criteria air contaminants and to provide modeling and advice on future initiatives that would place Ontario at the forefront in responding to climate change. Using the ENERGY 2020 and Informetrica models, ICF was able to deliver an integrated analysis of the economic and environmental impacts of the proposed policies.