Congressional Climate Camp #2: Federal Policies for High Emitting Sectors

Congressional Climate Camps
Find out more about the briefings in this series below:
Part 1	Budget, Appropriations, and Stimulus
Part 2	Federal Policies for High Emitting Sectors
Part 3	Lessons Learned from Past Congresses and Current Attitudes on Climate
Part 4	Federal Policy for Mitigation and Adaptation Win-Wins
Part 5	Understanding Budget Reconciliation

The Environmental and Energy Study Institute (EESI) is holding a Climate Camp online briefing series. We are going over the basics of the legislative process, highlighting key areas and opportunities for achieving near-term and long-term carbon reductions through policy.

This second session of the Congressional Climate Camp briefing series discussed the sectors with the highest carbon emissions, and highlighted policy mechanisms to reduce emissions in each sector—power generation, industry, buildings, transportation, and agriculture. Each of these sectors has unique challenges in reducing carbon emissions. Federal policymakers have an array of options to address these challenges through coordinated action, thereby maximizing impact across sectors.

Click below to go straight to the different highlights and sections. 

Agriculture

Power Generation

Buildings

Industry

Transportation

HIGHLIGHTS

AGRICULTURE (9.9 percent of U.S. greenhouse gas emissions)

Dr. Christina Tonitto, Ecosystem Scientist, Department of Global Development, Cornell University College of Agriculture and Life Sciences

• Agriculture causes 10 percent of total U.S. greenhouse gas (GHG) emissions. Nitrous oxide is the largest component of agriculture GHG emissions. Reducing nitrous oxide emissions is a key potential benefit of improved agricultural management. Methane is the second largest agriculture greenhouse gas due mainly to animal agriculture.
• Implementing regenerative practices is essential to improving the condition of soil, and can also help fix nitrogen in the soil, thereby reducing nitrous oxide emissions.
• Examples of regenerative practices include:
  • Covering bare soil with plants (i.e., cover crops) and diversifying the rotation of plants to cover bare soil. These processes increase system productivity, increase soil organic matter from plant residues, and help retain nutrients through active root zones. They also increase infiltration, reduce erosion, and improve soil physical structure.
  • No-till planting, which reduces soil erosion and makes it easier for water to infiltrate and replenish groundwater supply.
  • Perennial systems, which allow for continuous plant cover, reduce soil erosion, improve soil structure, increase water infiltration, and increase soil moisture.
• FAST-GHG is a greenhouse gas accounting tool for crops developed by Cornell University in partnership with researchers at the Environmental Defense Fund and The Nature Conservancy. It has a 100-year accounting framework and can track changes in nitrous oxide emissions, carbon dioxide emissions, and soil organic carbon sequestration, as well as leakage and permanence of practices (whether new sustainable practices are maintained overtime).
• If we implemented regenerative agricultural practices and improved nitrogen management, there would be a 5-10 percent reduction of national agricultural emissions.
• Policy considerations to reduce emissions in the agricultural sector include:
  • Implement regenerative agriculture to mitigate GHG emissions and limit the effects of climate change.
    • Because the increase in soil organic carbon is reversible, we need to consider how long a particular practice will be kept up (permanence).
    • Policy should factor in reversibility. Reversible benefits (increased soil organic carbon) are riskier than non-reversible benefits (reduced nitrous oxide or carbon dioxide emissions). Long time scales, such as 100 years, are also important because climate change is a long-term process.
    • Net GHG emissions resulting from a change in yield must also be accounted for.
  • Manage landscapes to increase carbon storage. To do this, we need to reduce demand for current commodity crops by using perennial systems and implementing dietary changes.
    • Increased demand for non-crop ecosystem services from landscapes also affects water quality, flood mitigation, and wildlife habitat and recreation.
  • Motivate improved agricultural management and implement payments for ecosystem services.
    • Payments for ecosystem services are estimated on long-term research studies and averaged over many farms, but it is challenging to quantify benefits.
    • With payment for outcomes, it is challenging to verify benefits. On-farm monitoring can cost more than the payment amount.
• We need to focus on reducing fossil fuel use across all sectors in order to have net GHG emission reductions. Regenerative agriculture practices need to be implemented in order to maintain the soil resource and improve water quality. Agricultural GHG emissions assessments must include leakage and permanence; they should identify nitrous oxide and methane as the main GHGs; and there should be a focus on permanent rather than reversible reductions in GHG emissions.
• Carbon-rich landscapes will result from increasing farmer access to improved practices, shifting crop demand, and accounting for ecosystem benefits through regulatory and market approaches.

 

Agriculture Sector Q&A

• Can you put the magnitude of potential agriculture emission reductions in context?
  • Because we run the risk of reversal, our conclusion is that if you have today’s composition of crops (dominated by corn and soybean crops), then there is not that much potential to guarantee carbon storage.
  • We need to re-envision what we want to do with our landscapes. If land could be set aside for specific uses, then we could attribute higher soil carbon to that land. But in a landscape where people rent their land, it is not clear to me that we can assume that any practice that is implemented in the next 10 years will be there in the next 50-100 years. That can change if there are policies and incentives for people to switch to alternative practices instead of having them absorb the risk.

 

POWER GENERATION (26.9 percent of U.S. greenhouse gas emissions)

Dr. Deepakraj Divan, Professor and Director, Center for Distributed Energy at the Georgia Institute of Technology

• The future of electric power in the United States consists of creating holistic solutions in electrical energy that can be rapidly adopted and scaled. We are unable to forecast how much the price of solar technology will go down and we are unable to accommodate that in our business practices due to changes that occur outside the utility sector.
• There is an opportunity for change because of the large portion of emissions that are a result of electricity generation, transportation, and buildings.
• We should approach reducing grid-related emissions by managing centralized and distributed generation. Using this method, reliability, resiliency, and cost goals are met. The new paradigm is that reliability and resiliency come from the edge of the grid. Affordability and sustainability come from the bulk of solar, wind, hydro, and other forms of energy.
• There are many fast-growing sectors that are transforming the grid.
  • Solar and wind farms are growing by 120-160 GW/year, and with the addition of storage, it is easier to dispatch their electricity.
  • Energy storage has had massive growth thanks to modular battery energy storage systems.
  • Transportation must integrate with the grid. The challenge is to get the gigawatts needed to charge trucks and other electric vehicles.
  • Resilience comes from the bottom, with microgrids, and will reshape the design of the future grid. Technology and cost pose challenges for community resilience microgrids.
• The National Academies of Sciences, Engineering, and Medicine have come out with a number of reports on this topic, including reports on resilience, decarbonization, the future of electric power in the United States, and grid reports about key technology recommendations.
• “Visioning” processes, where state agencies imagine what happens when there are long-duration outages and demonstrate arrangements, are essential to allow us to mitigate the impacts of such outages.
• It is necessary to establish energy standards, set zero-emission vehicle standards and manufacturing standards, facilitate new transmission infrastructure, and important to increase federal investment in clean energy RD&D.
• There is potential for major transformations in the grid, but the challenge is that there are many changes occurring outside the industry that make it difficult to see how things will manifest themselves. This sector is not used to changes at this pace. The report recommends developing generation technology with zero CO2 emissions and high dispatchability. The transition of power generation to zero-emission sources will require grid stability challenges to be addressed, more innovation to integrate all these factors together, and more investment from the government.
• Developing generation, storage, and distributed energy technology is necessary, as well as developing secure and reliable information and communication technologies.
• There is a pathway to achieve low-emissions. We need technology to transform the sector to a low-carbon system that is also reliable, resilient, and affordable. This requires fundamental rethinking, innovation, policies, and investments.   

Power Generation Sector Q&A

• How will generation sector emissions be impacted by—or how will they affect—the emissions from the building and transportation sectors?
  • These sectors are not controlled by the utility industry which is very regulated and slow moving. The transportation sector is moving quickly. We need major innovation in order to come up with the amount of power needed to charge these vehicles. There are policy issues that need to be addressed, but there is a big opportunity here.

 

BUILDINGS (12.3 percent of U.S. greenhouse gas emissions)

Liz Beardsley, Senior Policy Counsel, U.S. Green Building Council

• Buildings are significant in the overall picture of U.S. GHG emissions. They contribute 12 percent of direct emissions and 38 percent of emissions when associated energy generation is included. Codes, efficiency, and the age and size of buildings all impact their GHG emissions. Buildings have a carbon impact beyond energy: waste, water, transportation, and materials all have a carbon footprint. Both the construction and operation of buildings matter when you are looking at their climate impact.
• Scope one emissions include onsite emissions; scope two emissions are greenhouse gases from electricity generation; and scope three emissions are indirect emissions (i.e., not from assets owned by the entity, but on which the entity depends). As the grid gets cleaner, scope three emissions become more significant.
• In efficient buildings, operational emissions are reduced and the initial construction phase becomes more important from a climate perspective.
• Buildings are more efficient, but floor area is growing. So, although buildings are becoming more efficient, that is offset by how big they are becoming.
• The building stock is not getting younger, so retrofitting is important.
• Policy approaches to decarbonizing buildings have a goal of retrofitting six million buildings, training the workforce to know how to build efficiently, and investing in technology and RD&D.
• Federal buildings present an opportunity to lead by example. We need to invest in cost-effective energy improvements that boost resilience and health. Appropriations and funding are the primary ways to accomplish this, but we need to include supplemental funding and stimulus as well.
• We need to use Department of Energy (DOE) programs to advance on all fronts, including workforce, RD&D, energy codes, and better buildings. This is accomplished through tax incentives, leveraging private sector finance, investing in public building improvement, and state energy programs.
• Schools need energy efficiency grants and must leverage private finance. Technical assistance for school facility improvements is done through the DOE, Environmental Protection Agency (EPA), State Energy Offices, and State Departments of Education.
• Residential buildings should use DOE programs to advance on all fronts, as well as using Department of Housing and Urban Development (HUD) and Department of Agriculture (USDA) programs that impact housing through establishing minimum code and above-code incentives and requirements. The Weatherization Assistance Program (WAP), workforce training, and rebates are all essential.
• Grid-interactive efficient buildings are an example of the DOE’s RD&D. These are buildings that work with the grid and use smart, connected technology to reduce energy usage.
• Buildings are infrastructure. They provide huge opportunities to improve resilience, health, and quality of life while reducing GHG emissions.

 

INDUSTRY (22 percent of U.S. greenhouse gas emissions)

Dr. Julio Friedmann, Senior Research Scholar, Center on Global Energy Policy, Columbia University School of International and Public Affairs

• Industrial emissions comprise 22 percent of all global emissions. Industrial heat accounts for 10 percent of global emissions, which is more than car and plane emissions combined. Industry is trade-exposed, meaning that the nature of industrial emissions is global.
• Net-zero calculations should factor in embodied carbon, which represents the total emissions from the entire production life cycle. Tackling embodied carbon will require approaches across multiple sectors.
• In 2019, industrial emissions were the second largest U.S. emitter. Data suggests it could be the top source of U.S. emissions in 2020.
  • Cement, iron, and steel are the three largest industrial emitters worldwide, making up 60 percent of all industrial emissions. 
  • The refining and chemical sectors comprise over half of the U.S. industrial fleet.
  • U.S. industrial emissions come from ethanol facilities, hydrogen facilities typically associated with refining, petrochemical facilities, and cement kilns. Many of these facilities are located near ideal places to store CO2, which would allow for carbon capture and storage (CCS).
• Much like buildings, industry assets are long-lived. Until these facilities are replaced, much of industry decarbonization will occur through existing infrastructure.
• The options to decarbonize industry are relatively few and comparatively expensive. The most viable low-carbon heat applications and sources include hydrogen, electricity, biomass, and CCS. 
  • Some aspects of the industrial sector can be electrified, but not a lot. Industrial heat facilities operate at extremely high temperatures, making it difficult to electrify industrial processes. Industrial contracts are typically more expensive than a power purchase agreement, making cost an important factor.
  • Biomass (i.e., wood chips or biofuels) is another potential low-carbon option to power industrial facilities.
  • CCS can capture both heat and process emissions. While it comes at a lower cost than many other options, it requires CO2 storage sites and infrastructure.
• Hydrogen is the “Swiss army knife” of deep decarbonization. It can be utilized across multiple sectors, including industrial production, synthetic fuels, fuel cells, transportation fuel, feedstock for a circular carbon economy, or power turbines.
  • Global annual production of hydrogen has reached 70 million tons, and emits half a billion tons of carbon dioxide. Annually, the United States generates 10 million tons of hydrogen, a process that emits 50 million tons of carbon dioxide. Transitioning to zero-carbon hydrogen can make deep cuts in these emissions.
• Hydrogen is made in three ways, all with varying carbon footprints.
  • Gray hydrogen, accounting for 95 percent of all hydrogen, is produced using fossil fuels and steam methane reforming. This process emits carbon dioxide.
  • Blue hydrogen is produced in a similar process but utilizes CCS to keep emissions out of the atmosphere. The United States has multiple blue hydrogen facilities including Air Products in Texas, Coffeyville Gasification Plant in Kansas, and Enid Fertilizer in Oklahoma. With the proper infrastructure and policies, the United States can become a leader in low-carbon hydrogen production. 
  • Green hydrogen is produced by electrolyzing water and has a near-zero carbon footprint. Green hydrogen facilities are located in Norway and Japan, and facilities are currently being built in Saudi Arabia and Australia to help scale the production of renewable hydrogen.
• The key challenges to implementing hydrogen as an industrial fuel are cost, manufacturing limits, and infrastructure limits.
  • Green hydrogen costs $3–$8 per kilogram ($1.36–$3.63 per pound), while blue hydrogen costs $1.2–$1.8 per kilogram ($0.54–$0.82 per pound). This is much more expensive than what the market has today, indicating the need for market-aligning policies to promote more sustainable forms of hydrogen.
  • There is currently no mass manufacturing of electrolyzers, which limits green hydrogen production.
  • Lack of infrastructure, such as transmission lines to deliver zero-carbon electricity, can limit low-carbon hydrogen production.
• Chemicals comprise three percent of global carbon emissions while their associated industrial heat accounts for 1.5 percent.
  • Existing facilities can be retrofitted to convert them into blue hydrogen centers. Biogas and partial electrification can help reduce emissions, especially when facilities start to replace their steam units and have opportunities to integrate low-carbon electricity and steam into chemical processes. Investing in innovation is key to getting novel processes and technologies into these systems within the next two decades.
• Iron and steel production account for five percent of global carbon emissions, while its associated industrial heat makes up 2.5 percent. Since their production byproducts cannot be substituted, CCS is the most viable and cost-effective decarbonization strategy in the iron and steel sector. If implemented across the whole system, CCS can reduce emissions by 50 percent at $50/ton.
• The cement industry accounts for six percent of global carbon emissions while its associated industrial heat comprises two percent. Similar to iron and steel, the best decarbonization option for the cement industry is CCS across the whole system.
• Policymakers should consider how to protect wholesale producers from trade-exposed damage while making cost increases invisible to consumers.
• Policy options for U.S. low-carbon industrial development include incentives, infrastructure, and regulations.
  • Policymakers can consider a balance of incentives, such as buy-clean procurements, tax credits, Department of Energy grants, and asset replacement assistance.
  • Infrastructure costs are the hardest for industrial companies to handle. Building common use infrastructure can serve a wide net of industrial facilities while lowering the price of entry for clean solutions to emerge. Examples include upgrading infrastructure imports, creating transmission lines, and promoting clean electricity options like CCS sites and hydrogen pipelines.
  • Regulations like emission standards and caps can act as a “stick,” but these can disadvantage U.S. industry. Output-based rebates, in which the government rewards U.S. companies that exceed their regulatory threshold, can act as a better incentive to support U.S. domestic production and increase American competitiveness.
• Innovation is essential and under resourced when it comes to low-carbon industrial development.
• Wage, equity, and labor considerations must be incorporated into industrial development policies, as many facilities are located in environmental justice communities.

 

TRANSPORTATION (28.2 percent of U.S. greenhouse gas emissions)

John Porcari, Managing Partner, 3P Enterprises; formerly President of U.S. Advisory Services at WSP; formerly Obama Administration Deputy Secretary of Transportation

• Responding to climate change requires changing the way the transportation system is conceived, designed, and operated.
• We should approach transportation projects through two lenses: equity and climate change. Doing so encourages a different type of decision making than what has occurred historically.
  • In the past, transit involved redlining, segregating, and crippling neighborhoods within cities. American transit service was built around particular needs as opposed to a system-wide approach.
• There is a common misconception that transportation policy is a Washington-driven process and trickles down. The reality is that transportation project decisions and innovation occur at the local level, which then bubble up to state and federal policy. Local choices can drive system change, and federal policy can encourage local decisions.
• Taking an equity lens means making project decisions at the local level, whether it be redressing past inequities, prioritizing transit deserts, or addressing issues in local hiring, which was prohibited in transit projects.
  • During the Obama Administration, local hiring was used on a pilot basis in transit projects, which created job and skill training opportunities in local communities.
  • By promoting minority and disadvantaged business programs, you can build equity ownership. This is a more equitable approach to transportation, rather than the “check the box” process that you currently see in many places.
• Tackling climate change in transportation starts in the short-term with electrification.
• Tax policies should include not just tax credits for electric vehicle acquisition, but also accelerated depreciation for fleet-charging facilities essential to electrification. Public and private sector fleets should be thought of as distributed energy sources, not just electric vehicles. These fleets can act as microgrids that can augment the power grid when necessary.
• Long-term options include fuel cells for locomotives and other uses.
• Building active transportation infrastructure, such as sidewalks and trails to accommodate bikes, electric bikes, and scooters, provides viable alternatives to the single-occupancy vehicle.
• In the short term, electrification for training aircraft is happening today. In the long term, the majority of the fleet for regional airliners and mainline service can be electrified. Hybrid and other power sources will become viable as energy density increases.
• Pound for pound, the maritime sector is one of the biggest polluters on Earth. Burning bunker fuel portside often occurs in low-income communities and Black, Indigenous, and communities of color. Future initiatives can ensure that shore powering can run on electric power and that there is ported electric power for all maritime handling equipment.
• The response to climate change includes building a more resilient transportation system.
• Policymakers can support American manufacturing by leveraging existing Buy American requirements that overlay transportation funding at the federal level, as well as President Biden’s Buy American executive order.
• Policymakers should work with local and state-level stakeholders like mayors, county commissioners, and school districts.
  • Project decisions are being made at the local and state levels, whether it be for stormwater management, retrofits, or augmented transit service. Decisions about transformative, long-term projects (typically physical infrastructure projects) that take years to deliver are occurring at these levels.
• Policy and process changes must occur at local, state, and federal levels to advance equitable and green transportation:
  • The National Environmental Policy Act (NEPA) should incorporate climate and equity lenses. For instance, the Purpose and Need statement of a NEPA document typically talks about how to move people faster from one place to another. It does not typically consider reducing impacts on communities or reducing localized emissions. However, it can become a climate impact and equity statement, which can diversify the types of projects that can be supported by federal funding. NEPA project funding can be used to help restore communities and promote climate solutions.
  • We should move from an ownership philosophy of right-of-way to a stewardship model where policymakers can think about how to best use right-of-way to respond to climate change. This can mean incorporating high voltage DC transmission, essential for renewable energy, into national highways.
  • The prohibition on charging facilities on the national highway and interstate system must be eliminated to allow for more charging facilities across the transportation network.
  • The National Climate Assessment (NCA) should be more detailed on the transportation front and include a deeper level of analysis on possible ways to effect change. NCAs should also incorporate some type of equity scorecard.

Transportation Sector Q&A

Since transportation is relatively democratized and involves many individual owners and actors, how can the transportation sector reduce emissions?

• Porcari: Within transportation, there are literally millions of decisions that are being made. Each decision individually is a rational decision based on how quickly people want to get to where they are going and what it costs them to do that. Part of how you change that is through incentives and disincentives. There is currently no pricing for surface transportation if you are driving yourself. We have to price the system to reflect actual costs, such as congestion pricing. Public transportation needs to become a more viable alternative in our country, which will require the virtuous cycle of better service, more predictable service, and pricing that reflects a cost discount for continued use. Understanding and expanding the use of federal and discretionary funding programs can support better transportation. For example, as a former Maryland Department of Transportation secretary, I could add air capacity at an airport with 90 percent federal money. I could add highway capacity with 80 percent federal money. But, if I wanted better high-speed rail service, Amtrak service, or commuter rail service by formula, then it would involve no federal money.

Highlights compiled by Kimmie Skinner and Celine Yang.