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Jeremy Carl
Jeremy Carl
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Jeremy Carl argues that despite India’s lack of a concrete binding target for significant CO2 emissions reductions, India’s climate commitments come through on other fronts.

Sometimes in diplomacy what is not announced is more revealing than what is. Such is certainly the case in India's recent climate and energy negotiations with the US, as both countries prepare to head to global climate talks in Copenhagen. The occasion of Manmohan Singh's state visit to the US brought the announcement of a flurry of energy and climate-related initiatives. These initiatives were a combination of substance and political theatre, with potentially important initiatives on environmental and regulatory capacity-building and technology partnerships buried under a deep layer of bureaucratic niceties.

What was more noticed was what was not announced: any agreement for India to have a binding target for CO2 emissions reductions, something US and European environmentalists have long claimed is necessary as part of a global effort to stave off severe climate change. And while the Indian government has eventually announced a targeted reduction in what is known as "emissions intensity", CO2 emissions per unit of GDP, that wasn't a big stretch, given India's current annual efficiency improvements. Furthermore, Minister for Environment and Forests Jairam Ramesh has made it abundantly clear in Parliament that such targets would be voluntary and not part of a binding international agreement.

With more than 60 world leaders in attendance, we can be assured that Copenhagen will not end in public failure. But the better question is whether the announced success in Copenhagen will have any practical meaning other than determining that diplomats can spin a "success" out of any actual events. Some Indian commentators have seemed to hope for a "success" of that sort - fretting about India being outmanoeuvred on the public stage by China and other developing countries that may be able to strike a more cooperative posture.

While from a tactical standpoint, such concerns are understandable (there is little reason for India to not commit to doing things it would like to do anyway, such as developing more efficient power plants or cars), from the perspective of actually taking leadership in addressing the climate problem, they mean little. In some ways, India is emulating the example of the US from the previous Kyoto climate round: while the US certainly should have been more proactive and engaged, at least the Americans had the integrity not to ratify an agreement that they couldn't keep. Many other nations could not claim that; they either missed their targets entirely, or resorted to bogus accounting tricks to meet their goals.

That India is showing its seriousness by not making climate commitments it won't live by should actually be seen as a mature and responsible decision, not an intransigent one. Does anyone think that China won't walk away from its promise if they have trouble meeting their emissions reduction goals?

As an alternative to the hot air that is likely to come out of Copenhagen, it is instructive to look at the potentially useful energy and climate agreements the US and India did sign during the PM's recent visit. The fact that clean energy was the second item listed behind security issues in the joint communiqué announced by Singh and Obama is clear evidence that both India and the US place a high importance on this aspect of their relationship.

India and the US announced numerous programmes, from the joint deployment of solar electricity in Indian cities to the strengthening of India's environmental regulatory and monitoring capacity - which is sure to be a critical step if India is to make serious and verifiable long-term commitments to emissions reductions. Perhaps most important, at least symbolically, was the announcement of joint scientific R&D work for renewable energy technologies. The Indo-US Clean Energy Research and Deployment Initiative, which promises joint development of new energy technologies and the development of a joint research centre with a public-private funding model, is one such initiative.

Ultimately, despite the bluster of diplomats in Delhi, Washington or Copenhagen, the solutions to the climate change problem must come through a technological revolution in the world's energy infrastructure. And it is here that India, with its burgeoning corps of bright young engineers, could make the biggest impact on climate change mitigation. Circumstances may not permit

India to lead the deal-making in Denmark, but if the Indian government gets serious about turning more of India's brightest young minds towards solving the clean energy problem, then India's contribution to solving the climate change conundrum may be significant indeed.

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PESD researchers Richard K. Morse and Gang He are in Copenhagen attending international climate negotiations at the UN's COP 15.  Key issues in PESD's research platform are prominently featured in the event: carbon capture and storage, reform of the clean development mechanism (CDM), Chinese energy markets, carbon markets,  the future of coal and gas and global emissions, the smart grid, and a host of other topics central to the future of the global energy system.  Richard and Gang are testing their latest research with some of the world's key decision markers on energy and climate and sharing Stanford and PESD insights in this global forum.

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(Excerpt) According to climate scientists, averting the worst consequences of climate change requires that the increase in global temperature should be limited to 2°C (or 3.6°F). to achieve that objective, global emissions of green house gases (GHGs)—the main human cause of global warming—must be reduced to 50 percent of 1990 levels by 2050.

The key to successful climate change abatement at those scales lies in leveraging the collective actions of developed and developing countries. Cumulatively, developed countries have been responsible for most human emissions of GHGs. that picture will be quite different in the future as emissions from the developing world take over the top mantle. Given this dynamic, there is a general agreement internationally that developed countries will lead emissions reductions efforts and that developing countries will follow with “nationally ap- propriate mitigation actions.” turning that agreement into environmentally beneficial action requires close international coordination between the developed and developing countries in allocating the responsibility for the necessary reductions and following up with credible actions. However, the instruments employed so far to promote the necessary collective action have proved to be insufficient, unscalable, and questionable in terms of environmental benefit and economic efficiency.

Currently, the most important and visible link be- tween developed and developing countries’ efforts on climate change is the Clean development Mechanism (CdM). the CdM uses market mechanisms—the “carbon markets”—to direct funding from developed countries to those projects in developing countries that lead to reductions in emissions of warming gases. In reality, the experience with the CdM has been mixed at best since its inception in 2006. while the CdM has successfully channeled funding to many worthy projects that reduce emissions of warming gasses, it has also spawned myriad projects with little environmental benefits. overall, the CdM has led to a significant overpayment by developed countries for largely dubious emissions reductions in developing countries.

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Harvard International Review
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Varun Rai
Varun Rai
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The traditional approach to demand response of paying for a customer's electricity consumption reductions relative to an administratively set baseline is currently being advocated by the Federal Energy Regulatory Commission (FERC) as a way to foster the participation of final consumers in formal wholesale markets. Although these efforts may lead to greater participation of final consumers in traditional demand response programs, they are likely to work against the ultimate goal of increasing the benefits that electricity consumers realize from formal wholesale electricity markets, because traditional demand response programs are likely to provide a less reliable product than generation resources. The moral hazard and adverse selection problems that reduce the reliability of the product provided by traditional demand response resources can be addressed by treating consumers and producers of electricity symmetrically in the wholesale market. Several suggestions are made for how this would be accomplished in both the energy and ancillary services markets. A specific application of this general approach to the California wholesale electricity market is also provided.

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The Electricity Journal
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James Bushnell
Benjamin F. Hobbs
Frank Wolak
Frank Wolak
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Coal is the major primary energy which fuels economic growth in China. The original Soviet-style institutions of the coal sector were adopted after the People's Republic of China was founded in 1949. But since the end of 1970s there have been major changes: a market system was introduced to the coal sector and the Major State Coalmines were transferred from central to local governments. This paper explains these market-oriented and decentralizing trends and explores their implications for the electric power sector, now the largest single consumer of coal.

The argument of this paper is that the market-oriented and decentralizing reforms in the coal sector were influenced by the changes in state energy investment priority as well as the relationship between the central and local governments in the context of broader reforms within China’s economy. However, these market-oriented and decentralizing reforms have not equally influenced the electric power sector. Since coal is the primary input into Chinese power generation, and power sector reform falls behind coal sector reform, the tension between the power and coal sectors is unavoidable and has raised concerns about electricity shortages.

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Program on Energy and Sustainable Development, Working Paper #86
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Peng Wuyuan
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Focusing on capture systems for coal-fired power plants until 2030, a sensitivity analysis of key CCS parameters is performed to gain insight into the role that CCS can play in future mitigation scenarios and to explore implications of large-scale CCS deployment.
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This paper analyzes the potential contribution of carbon capture and storage (CCS) technologies to greenhouse gas emissions reductions in the U.S. electricity sector.  Focusing on capture systems for coal-fired power plants until 2030, a sensitivity analysis of key CCS parameters is performed to gain insight into the role that CCS can play in future mitigation scenarios and to explore implications of large-scale CCS deployment.  By integrating important parameters for CCS technologies into a carbon-abatement model similar to the EPRI Prism analysis (EPRI, 2007), this study concludes that the start time and rate of technology diffusion are important in determining the emissions reduction potential and fuel consumption for CCS technologies. 

Comparisons with legislative emissions targets illustrate that CCS alone is very unlikely to meet reduction targets for the electric-power sector, even under aggressive deployment scenarios.  A portfolio of supply and demand side strategies will be needed to reach emissions objectives, especially in the near term.  Furthermore, the breakdown of capture technologies (i.e., pre-combustion, post-combustion, and oxy-fuel units) and the level of CCS retrofits at pulverized coal plants also have large effects on the extent of greenhouse gas emissions reductions.

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Program on Energy and Sustainable Development, Working Paper #85
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Varun Rai
Varun Rai
John Bistline
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Judith K. Paulus
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FSI's Program on Energy and Sustainable Development (PESD) is pleased to announce the selection of a new director, Frank Wolak, who is Holbrook Working Professor of Commodity Price Studies in the Department of Economics and FSI Senior Fellow.  Professor Wolak brings to the post a distinguished record of scholarship and deep policy experience in energy and environmental economics and regulation.

Wolak’s wide-ranging research contributions have examined energy systems both domestically and in emerging markets around the world.  He is the Chairman of the Market Surveillance Committee of the California Independent System Operator for the electricity supply industry in California and a Research Associate of the National Bureau of Economic Research (NBER), among other professional affiliations.

PESD founder David G. Victor, Professor of Law and FSI Senior Fellow, stepped down from the director position effective April 1, 2009. PESD Assistant Director Mark C. Thurber will take over as acting director until Wolak assumes the director position on September 1, 2009.

Victor will remain at Stanford as faculty through the end of the summer of 2009, when he will leave to become a full professor at the School of International Relations and Pacific Studies at U.C. San Diego, where he will build a research group working on the study of international regulation.
 
“FSI and Stanford are extremely grateful to David Victor for all that he has done to establish PESD and build it into the innovative and influential research program that it is today,” said FSI Director Coit D. Blacker, the Olivier Nomellini Professor in International Studies. “I know that the entire Stanford community joins me in extending our best wishes to David and in offering a hearty welcome to Frank.”

In a world facing profound transformations in the way energy is generated and used, PESD’s work on how political, economic, and institutional factors combine to shape energy market outcomes meets a critical global research need. For additional information on PESD research interests and platforms, please contact Acting Director Mark Thurber.

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