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simulating carbon fee and dividend HR763

Hello,


This support question and answer may also be of interest to others. Will add follow-up comment/question.


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Hi Anna-Maria,

Thanks for reaching out. As you brought up, here is how the HR763 could be modeled in En-ROADS: https://en-roads.climateinteractive.org/scenario.html?p39=15&p41=1&p42=815&p43=2021&p44=80&v=2.7.6

As for the CLC proposal, En-ROADS does not currently allow for exponential growth when implementing a carbon price. It's something we'll take note of when looking into adding features to the model once our capacity grows. 

Best, 

Yasmeen

On Tue, Jan 21 at 12:25 PM , Anna-Maria Mueller wrote:


Hello,

 

I have a question about modelling different carbon fee and dividend proposals in En-ROADS, in particular HR763 (Energy Innovation and Carbon Dividend Act) versus the proposal put forward by the Climate Leadership Council.

 

Towards the end of Webinar 2 (at 1:15:31) of your excellent En-ROADS training series, Drew Jones tries to demonstrate what HR763 would look like. That didn’t look right to me. Maybe that’s what CCL’s original proposal was..? The way I understand it, HR763 –fully supported by CCL -- would start with $15/ton, not take 10 years to reach $15 as Drew’s input suggested. Also not sure where his $765 maximum price comes from. See attached spreadsheet => this is how I understand the basics. => from that I would have picked a “final” price of $815 for 80 years down the road (assuming we start in 2021 and emissions reductions are met).

 

Is there a way to use your current version of En-ROADS to also model the Climate Leadership Council proposal (https://clcouncil.org/our-plan/), which calls for a starting price of $40 with a 5% above inflation annual increase, i.e. exponential growth, not linear? If not could you perhaps implement that? This seems such an important question to discuss. When you plot the price development of the two it is obvious that the CLC proposal would be totally inadequate. Would be great to be able to also illustrate the “gist” of the difference in En-ROADS.

 

Thank you!


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Hi Philip,

 

I think I see now what the source of the confusion is: CCL talks about CO2 emissions, not total green house gas emissions. Scrolling to FAQ 16. at the bottom of https://citizensclimatelobby.org/carbon-fee-and-dividend/ 

I found this:

If Carbon Fee and Dividend is enacted, according to the REMI study, CO2 emissions will decline 33 percent after 10 years and 52 percent after 20 years relative to 1990 levels. This trajectory is roughly consistent with a 90 percent reduction by mid-century. “ 

 

I have to say, I have yet to find a good source of information for lay people that presents all of this in a clear fashion. There are so many apples and oranges whirling around, reductions in what (e.g., CO2 or total greenhouse gases) relative to what (1990 or other base year or relative to business as usual) …

 

AM

Just noticed in my second post I wrote:

The bill sets a target of 90% GHG emissions reductions by 2050, with a set of interim targets. 

I am pretty sure I copied that sentence from somewhere else, just can't remember where from. Looks like I propagated confusion... 

Follow-up:


Hi Yasmeen,

 

Thank you for your response. Looking at this more closely, here another tidbit on HR763 (Energy Innovation and Carbon Dividend Act):

 

The bill sets a target of 90% GHG emissions reductions by 2050, with a set of interim targets. Starting in 2025, if the emissions cuts don’t keep up with the emissions reduction schedule, the annual increase in the carbon fee can be strengthened from $10 to $15 per metric ton.

 

It would be interesting to model the scenario when emissions reductions are not met, which would trigger an increase in the rate to $15/year, which would look like this:

Starting year 2020 with $15/ton.

Annual increase of $10/ton until 2025.

Annual increase of $15/ton thereafter.

Brings us to a fee of $1,190 by the year 2100.

 

The way the En-ROADS input parameters are set up I don’t think we can model this scenario exactly but in an approximation we could have said:

Carbon price: $65

Year to start phase in: 2020

Year to achieve initial price: 2025

Carbon price final target: $1,190

Year to start achieving final price: 2026

Years to achieve: 74

 

The hitch is: the final carbon price target slider maxes out at $850.

You may want to increase the range of this slider, especially considering that the above is actually at the low end of the range of carbon prices the IPCC SR 1.5C recommends (estimated that governments would need to impose effective carbon prices of $135 to $5,500 per ton of carbon dioxide pollution by 2030 to keep overall global warming below 1.5 C).

 

AM

I too would be interested in hearing comments on differences between EnROADS and the REMI Study. Eyeballing the graph from this EnROADS approximation of HR763 with the parameters you describe

https://en-roads.climateinteractive.org/scenario.html?p39=15&p41=1&p42=815&p43=2021&p44=80&v=2.7.6

it looks to me more like a roughly 45% reduction by 2050, not 7%.

The CCL website talks about a 50% reduction (relative to 1990; also not sure about the starting date -- the study was I believe from 2013) by 2035, compared to an eye-balled estimate off the EnROADS graph of 30%. So EnROADS does produce a more conservate estimate of the reduction, but not by an order of magnitude. Considering the different nature of a US projection (presumably easier to project) versus the abstract aggregate global (plus possible differences in baseline and start date), they seem reasonably similar.

Philip, does the simulator scenario in the link look like yours? Am I missing something?

Would be interested in hearing about your experience with the EnROADS workshop for CCL members. That’s exactly what I would like to use it for. Any chance your workshop will be recorded? Would be really interested in hearing about the questions and insights that come up during your workshop.

I will be leading an ENROADs workshop to a large group of CCL members. In preparation for that meeting, I would like to know why the HR 763 carbon pricing results in such a large difference in the % reduction of GHG for the year 2050 between the ENROADS projection and the CCL REMI model projection. The CCL model projects a 90% reduction in US GHG by the year 2050 but the ENROADS simulator shows only a worldwide drop of about 7% when using the same carbon pricing world-wide (first year $15/tonne, increasing by $10/tonne until $815/tonne in 2100). I realize there should be differences between the US projection and the world projection but would not expect it to be so large. One possibility I'm thinking may account for the difference is perhaps the ENROADs model does not assume the higher carbon price leads to secondary effects, such as greater energy efficiency (e.g., carbon price increase causes higher electricity price which in turn  leads to reduced building energy consumption as people insulate more etc), while the CCL REMI model perhaps does. I could not find documentation on the REMI model or the ENROADS model to answer this question. Do you know whether the ENROADS carbon pricing algorithms include secondary effects of a policy change such as carbon pricing? 

Sorry for the delayed response Anna-Maria- I was on vacation. 

I looked at your model link and it looks like you used the same carbon pricing as I had used, the EICDA proposal ($15/ton the first year followed by $10/ton thereafter to the year 2100 where it hits $815/ton). I don't see though where you get a 30% reduction in GHG by the year 2035. Looking at the graph of "Green House Gas Total Emissions" the GHG decline from 62.9 GT/yr in 2020 to 58.5 GT/yr in the year 2050, a 7% decline, while CCL estimates a 90% reduction over this time period  for the US (details are in the excel spreadsheets on the CCL website).

Has anyone else found an answer for this difference?

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