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Climate experts discuss what policies, incentives are most effective at reducing energy emissions

Highlights

Canada enacted carbon pricing

Policies should target emissions

  • Author
  • Jared Anderson
  • Editor
  • Richard Rubin
  • Commodity
  • Electric Power Energy Transition Natural Gas Oil

Roughly a year after the US Inflation Reduction Act passed, climate change experts discussed what has worked and how corporations can be incentivized to help address the issue despite the challenges posed by politics and companies that are evaluated on quarterly profits.

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"If we're going to make this transition happen at anywhere close to the scale and speed we need, we need all hands on deck," Jason Bordoff, founding director of Columbia University's Center on Global Energy Policy, said during a panel discussion held Sept. 19 at the university's campus in New York City.

But the oil and gas industry as a whole is spending 2% of their capital expenditure at a time of record high profits on clean energy in an environment that has renewed concerns about energy security and energy prices, Bordoff said.

He pointed to rising costs for offshore wind as an example of a renewable energy technology that has seen recent cost increases after the sector experienced decades of falling costs and prices for things like onshore wind and solar power.

"We did see some announcements over the past year that in some cases some companies are pulling back a little bit on targets or commitments that had been made," Bordoff said.

One key point is that if people in these board rooms believed we could get anywhere close to net zero greenhouse gas emissions by 2050, people would be behaving very differently than they are today, Bordoff said.

So, despite some rhetorical commitments, companies either think we will not reach these goals, or it will be harder to make money with these measures in place, he added.

Abigail Dillen, president of environmental group Earthjustice, asked is there any business accountable to shareholders that would ever cede the power and profits that they currently have? "I think we are seeing the answer is no," she said.

So, the dilemma is how to take power from such a politically powerful industry when that industry is still needed because even net zero emissions assumes some volume of oil and gas consumption, Dillen said, adding that the transition needs to be orderly and requires the power and access to capital that large oil and gas companies have.

At times of high oil prices, shareholders want profits, but some shareholders want to invest in the energy transition, so how can companies do both, Bordoff asked.

Actions already taken

Steven Guilbeault, Canada's minister of environment and climate change, said that in 2018 the country enacted carbon pricing, an effort that was fought all the way to the supreme court. Right now, carbon pricing is at $65/mt and will increase to $170/mt by 2030, he said.

"We know $65/mt is not enough and it will really start to bite when we get to around $100/mt, so we're getting there and it's going up by $15/yr, Guilbeault said, adding that Canada has draft regulations for a zero-emissions vehicle mandate and the country wants to reach net-zero carbon emissions in the power sector by 2035.

Asked about the most effective climate change mitigation measures that can be advanced, Katharine Hayhoe, chief scientist for the Nature Conservancy, said there is no silver bullet but there is a lot of "silver buckshot," meaning there are solutions across the spectrum that together can tackle the issue at scale.

If all investments were made in direct air capture, for example, by 2050 the technology could take up 2.5% of fossil fuel emissions, she said. So, all solutions will be needed, with energy efficiency being one of the larger ones, as most of the energy we use is wasted, Hayhoe said.

Noting that enacting strong climate policies is challenging, Guilbeault said that he expects his ministry to get sued over its proposed clean power regulations, "but if you're getting sued it means you're doing the right thing."

The IRA is viewed around the world as a game changer, he said. There are tensions and unforeseen consequences but lots of positive things contributing to the climate debate as well, he said.