For a Path to a Decarbonized Economy, Look to the States

In the last year, the need for action on climate change has become ever more clear. In October 2018, the Intergovernmental Panel on Climate Change released a report outlining the steps needed to limit warming to 1.5 degrees Celsius, and discussing in stark terms the consequences of exceeding that goal. A month later, the federal government released the Congressionally mandated Fourth National Climate Assessment, warning of damaging effects on the United States and its economy. Flooding in the Midwest, wildfires in California, and powerful hurricanes underscored the palpable effects of a changing climate. Millions of young people thronged the streets for global climate strikes in March, May, and September 2019.

Under President Donald Trump, the U.S. government has dismissed climate science and taken steps to undo the efforts of the previous administration. But while federal action has stalled or reversed, according to Robert Klee, a lecturer at Yale and the former commissioner of the Connecticut Department of Energy and Environmental Protection, states have pursued a variety of policies to move toward decarbonization. In a series of articles in the Yale Center for Business and the Environment’s Clean Energy Finance Forum, Klee outlines the steps that both Democratic and Republican states have taken and proposes that together they provide a roadmap for a 10-year, national decarbonization program.

Yale Insights talked with Klee about how the states have served as laboratories for climate policy, the components and cost of a crash climate program, and why he’s optimistic.

Do you think that the 1.5-degree Celsius limit is in reach technologically, and is it in reach politically?

I think it is more likely in reach technologically than politically.

We have existing systems—solar, wind, zero carbon baseload, which is nuclear and hydropower, plus storage—those are baseline technologies that will get us most of the way.

What the IPCC 1.5-degree Celsius report is showing is that you also need negative emissions. At this point we’ve lost our opportunity to act that we had 20 years ago when we already knew this was a problem. We have now gotten to the point where anything we do will need some negative emissions. Technologically, we’re not there yet. That’s carbon capture and storage—either for existing fossil fuels or growing plants to pull carbon out of the atmosphere, turn them into energy, and then bury the CO2 that’s produced in that process, to be truly negative. Then there are the folks who are vacuuming the air, doing straight direct-air capture of carbon dioxide. All of that is barely above a laboratory experiment—there are a few companies on the margins, but nowhere near the gigatons of negative emissions that all the science now says we need in order to keep warming to one and a half degrees, probably to two degrees as well.

So technologically, we’re most of the way, but there are still some huge gaps that we don’t have a clue about at scale.

On the political side, our emissions are going up, even at a time when people are more awake than ever on these issues, from people marching in the streets to the Midwestern farmer who is now flooded for multiple years followed by drought. There’s that recognition that there is something happening that is not normal. Despite all of that, we are still stuck in a political system that is not moving, particularly, at the federal level, and that’s why a lot of the article is about how some states have managed to break free from that.

How do the states serve as a model for what to do nationally?

I’m a lawyer and scientist by training, so I like to go back to a Supreme Court ruling from Justice Brandeis that was in the New Deal timeframe about the importance of states as laboratories, as places where you can experiment in policy innovation. And those innovations have often led to national-level adoption because they’ve been tested, because they’ve had the tires kicked a little at the state level, and there’ve been some experiments that worked and some that haven’t. Now we’re seeing amongst the states a growing consensus on a few core things that are necessary to make that transition from a fossil-based, carbon-addicted economy to a zero-carbon, decarbonized, new economy that still works for people, still creates jobs, still functions as a society.

Over these last 20 years, the federal government has been doing, at best, little more than studying the issue, or at worst, undermining action on decarbonization. The states can fill that void. The article series highlights those key things that when you add them up might get us towards that two-degree, one-and-a-half-degree level of ambition if you can figure out the federal politics.

The states did figure out the politics to some extent. I’ve made a concerted effort to make sure that the article was pulling from Republican-led states, Democratic-led states, and states with mixed leadership to show that it doesn’t have to be Washington-level dysfunction. Maybe because they’re more local, maybe because they’re a little more representative, more connected to the people on the ground, they’ve managed to figure that out and make it work.

You write about states setting mandated goals for emissions. What does a mandate mean? What happens if you fail to hit that target?

To me, part of the value of an on-the-books mandate is that in the government enterprise, across all of your agencies, a leader can say, “Look, this is the direction we’re headed, so you’ve got to be on board.” Everyone’s got to have that hard target in mind when they’re making all their decisions and really evaluate, Is what I’m going to do positive, negative, or neutral towards that goal? Is this permit going to help do that? Is this regulation that I’m promulgating going to help do that? Is this transportation initiative going to do that or not? And if all those decisions are viewed with that lens, you can actually start changing the way that they work.

Also, when you put it in law, and you say, it shall be done, it becomes a hard legal target, and those hard legal targets often enable outside groups to hold you to account. You shall do this by this date; if you don’t do it by that date, you get sued, and you lose. And if you lose, you then have to implement under judicial order those steps that will actually get you there.

For the federal government, in my opinion, it needs to be in statute, because when it’s done by executive order, when it’s done by the administration every four or eight years, you then reverse course. We can’t keep doing that; we can’t keep flip-flopping. It needs to actually be a target that is a reasonable distance of time away, that doesn’t change every four years.

You mentioned nuclear in the mix earlier.

Yes, it puts me in a certain camp.

Is nuclear power necessary to reach the goal? Do we need to be building new nuclear plants, and what are the barriers to that?

Nuclear is one of the harder and more complicated choices. My view on nuclear is primarily about existing nuclear. I think 20% of our nationwide electric generation is baseload nuclear—it’s on over 90% of the time, it’s zero carbon. And yes, it has problems with its waste, which we haven’t solved, but it’s solvable at some level.

Not everyone will be happy about that. But to lose that baseload right now, at a time when we need decarbonization as fast as we can, would I think be a mistake. So the drive to get rid of existing nuclear is to me very shortsighted. When Germany went through this, when Japan did, post Fukushima, their next option was coal, which was the exact opposite direction that anyone would want to go.

To the extent that we can, we need to hold on to our existing baseload nuclear for the time that we need to develop battery storage, pump storage—all these other ways that we need to make intermittent renewables, wind and solar, get to the point where they would equate to baseload nuclear. I think for that next 10, 12 years, we need that.

Future new nuclear has always seemed to be 10 years away, for the last 60 years. We’ve seen with the two reactors in Georgia and South Carolina the billions and billions of dollars of cost overruns to build nuclear at this point. And to me, new nuclear, at that price, is not worth it—wind at 2 cents or whatever it’s down to and solar at similar prices plus battery storage will be cheaper, is cheaper, today.

So we will have nuclear with us for another decade or more. It will be during that time that we need to scale up a sufficient amount of storage to make our intermittent renewables act and behave more like baseload nuclear, plus all the controls and smart grid and other things that enable that all to function and work. Which is a new role for the utilities, who have to now figure out this new world.

What would that modern electrical grid look like?

The grid of the future would be a move away from large power plants sending transmission over very long distances in one direction to your home. There will still be some larger-scale, grid-scale, probably wind and solar, nuclear, and some residual natural gas because the grid needs to balance all the time—it needs to have the power for any light that’s going to be turned on, so there will probably be some fast, efficient, natural gas peaking plants.

But in your local grid, on the distribution side, you will have much more distributed energy and local energy generation. So rooftop solar, combined heat and power at industrial facilities, and local clean generation like fuel cells, could be connected in smaller microgrids that are more resilient. Instead of this one massive grid that when it all goes down, you go down, you can have isolatable, self-sustaining nodes that could stay up in times of power outage.

That grid is also talking to your home; your smart appliances are talking to the grid and being able to be controlled. You might even be paid for your willingness to give up some control over your thermostats. These technologies already exist. You can sign up for a program to allow the utility company to make it a degree warmer in the summer or cooler in the winter to reduce load on the overall system. In Vermont you can have a Tesla Powerwall battery in your basement that’s being fed by your solar panels. It’s your backup when the lights go out, but when it’s really hot in the summer, they can take control of your battery and use that stored energy, feed it into the grid, instead of activating a dirty old peaker plant that they would have to spend a lot of money on.

Then you add your car, which has a big battery in it, to the mix. In California, when they’re producing too much solar in the middle of the day, you can have your car batteries charging to take that stress off of the grid. Your car can be something that helps smooth out the grid, knowing when it should be charged and when it could discharge back to the grid.

So that future is very distributed, very local. You are a participant in that system in ways that you aren’t now, which may be a challenge because most people don’t know or care very much about what happens when they turn on the lights. That might be a hurdle, but that can be overcome with financial incentives.

How far can efficiency get us?

I think efficiency is one of our most important things to do for the next five to seven years because this is a time when our grid is not yet 80% or more clean. Any energy you’re using is still pulling from fossil resources, so if you can reduce the amount that’s currently not as clean as it could be, that’s a positive.

Second, efficiency opens up space for the electrification of other things. Part of the theory here is that we’re going to have to make the grid clean and then electrify as much as we can. We have to electrify as much transportation as we can. Currently transportation is almost all fossil fuels; to shift even 20% of that will be a huge amount of new electric load. Efficiency makes some space for that new electric load.

Electrification of home heating and cooling is the other big area. Efficiency makes home heating and cooling systems work better; a more airtight, better-sealed home is more receptive to air source heat pumps and ground source heat pumps and all these other new electric versions of home heating and cooling. And it’s a way to save money—every dollar of efficiency spending brings back three or more in terms of its cost benefit analysis.

You mentioned transportation. In California, all vehicles sold after 2050 will have to be electric.

And some car companies are also making similar pledges that they’re not going to sell cars past 2050 that aren’t battery-electric or hybrid. So at a minimum they’ll have some amount of battery range and then maybe a gas supplement.

Is there enough turnover in new vehicles for that to make a dent?

That is a challenge. Vehicles lasts longer; their turnover rates are now over 10 years. I think to transition the fleet at the speed with which we would have to, we are at the point where we’ve lost a little too much time and you’re going to be stranding assets. You may need to have incentives to get folks to switch vehicles earlier than they would normally have.

Now, if electric vehicle uptake isn’t going as fast as you’d like, you can put the pedal down on cleaning up the grid or electrifying home heating and cooling. But transportation is the one that I’m the most optimistic about because electric vehicles are cool, fun, and fast, and in many ways they will keep selling themselves. People will get excited about buying a car, much more so than they get excited about the furnace in their basement. So I’m probably more optimistic on electrification of vehicles.

You see in the Bloomberg New Energy Finance reports the speed at which the cost of batteries are coming down; the projected point of cost parity between electric and traditional internal combustion keeps hovering around 2023, 2024. So the technology is going to be there, new cars are things that people want, and then it’s a question of how fast you can drive people to the vehicles. Norway has demonstrated that if you give the right incentives then you can have more than half your vehicles that are sold be electric vehicles. This is a crucial piece because transportation is a 35% wedge of our emissions pie, and it’s the one that we haven’t done a good job on.

When it comes to public transportation, you write that zero-combustion buses are the key, not new high-speed trains.

That’s my opinion. There are still some folks who view rail as the answer. But just from a pragmatic point of view, there are 65,000 transit buses currently on the roads today. So we have that infrastructure already there, with routes and people using them. It’s literally just switching the thing, versus building a whole new set of infrastructure, rail lines, right of ways, etc.

What is driving buses today is diesel, and it’s driving in urban areas where people are very close to that diesel exhaust. Switching that to a zero-emission electric bus with technology that is currently rolling around, it seems to me a no brainer. It will have direct health benefits to reduce that local air pollution problem and it requires no other infrastructure investments.

Now you can do more—that’s part of the livable and walkable cities initiatives that are creating better bus lanes and better bus routes and better interconnections between those buses and the regional trains, which leads to more ridership. But on day one you can snap your fingers and really improve the lives of people in cities across the country by just switching their buses for not too much money.

Is putting a price on carbon still part of the equation?

Absolutely. It can be and it should be, and states have figured out that it needs to be “all of the above.” I’m in the camp that says it can’t be the only solution; I’m not a fan of “We’ll just put a price on carbon and everything will figure itself out.” So far anyone who’s tried to do that and put just a price on carbon has never set it high enough and when it starts creeping up higher, it gets turned back down lower. Those systems exist in many of the states that are leading on clean energy deployment, but they work in conjunction with and as complements to their mandate-style policies.

You’ve set a price tag for the whole thing.

Yes, the price tag is $1.25 trillion, plus or minus, over 10 years – or $125 billion a year, including the research and development dollars, which I think are best spent at the federal level. It was done as a thought exercise: what if you’re trying to scale up some of the more ambitious things that states have done to a 50-state approach, and do things at the scale that seems to be necessary for a deep decarbonization nationwide?

Don’t get me wrong, that’s a big number. But it is not outside of the realm of possibility considering the things we already spend multiple hundreds of billions of dollars a year on. It’s roughly the size of the Trump tax cut. We spend $600, $700, $800 billion a year on the military. We do things at that scale and don’t sneeze at it.

Considering the amount that we’re already spending in terms of cleanup and reaction to disasters and on disaster relief, not even the preventative resilience side, which we need to do anyway, I don’t think it’s a huge amount. It is more than we’ve ever spent in this area, but I think this is a moment in time where people realize that, wait, this is important. Plus, those dollars spent are spent and invested in things that create jobs. If you think about investments in green banks, for every dollar they spend, they bring in $5 in private capital—they catalyze the whole clean energy economy. So those dollars are not like tax cuts; they may actually help stimulate and create whole new industries, new economic development, new job opportunities. Those are dollars well spent, because you end up with a cleaner, healthier, more sustainable world.

At the end of the 10 years, do we have to continue to spend at that rate? Or does the market take over?

There are some things that can transition away to the market. I think you would still need to do more work on those things that we haven’t figured out yet and probably won’t even after 10 years. The negative emissions, the carbon capture and storage, the sequestration of carbon.

To me this is a 10-year effort in the spirit of the moon shot—that sort of intense activity to really turn our ship around. Ten years at $1.25 trillion is my guess, and it is nothing more than an educated guess. And there will probably be some who will say that is woefully low and others will say is way too high and I welcome that. But I think that’s the scale and scope of what we have to do in the next 10 years. This is a critical window and we need ambition at a scale that we have not demonstrated for 20 or 30 years. This is at least one vision of that ambition, building on what the states have done.

This is the cost of a 10-year program that starts now. If we waited another five years before we did anything, then the whole equation presumably changes.

We probably lose the ability to get to one and a half degrees if we are not acting with sufficient scale in the next five years.

There are economic theories that say, well, why not wait until the technology is all cheaper? The problem is that our natural systems can reach tipping points that we are not prepared for. You could wait a longer time, but the risk and costs associated with that path starts entering into unknowns that the scientists are showing are pretty scary—the collapse of polar ice sheets, the loss of the Gulf Stream. Those sorts of things would start making our already-weird climate very extreme.

You write that 2018 was the “great climate awakening.” Do you see recent reason for optimism?

I do. The awakening is a combination of the coalescing of the scientific community and the IPCC one-and-a-half-degree report and, in the U.S., our Fourth National Climate Assessment. Scientists said some pretty big, pretty stark things that didn’t end up on the shelf and didn’t end up ignored. And the events of 2018 in the U.S. – fires, floods, hurricanes – along with improved media coverage and led to a broader and visceral understanding of the change that we’re experiencing. We’re also actually willing now to talk about an actual climate connection or enhancement to these extreme events. The storm in Houston was at least 10 to 15% wetter because climate change caused the ocean temperatures to increase the amount of capacity for the storm to retain water.

The climate story was told in a way that made the front page above the fold of all the major newspapers, in a way that resonated with people who actually are feeling, seeing, experiencing this. It’s not a polar ice cap a long distance away with a polar bear that you’ll never see. It’s your farm, it’s your river, it’s your coastal community that floods twice a month.

So there is all of that, plus the youth climate movement, which has really gathered steam. You have millions of young people taking to the streets. It feels different. It is a younger generation rightly pointing at an older generation to say that you’ve forsaken us. That you’ve wasted decades and we’re not going to put up with it anymore.

Interview conducted and edited by Ben Mattison.