1. Climate Change: The Move to Action (AOSS 480 // NRE 480) Richard B. Rood 734-647-3530 2525 Space Research Building (North Campus) rbrood@umich.edu http://aoss.engin.umich.edu/people/rbrood Winter 2010 April 6, 2010

2. Class News Ctools site: AOSS 480 001 W10AOSS 480 001 W10 On Line: 2008 Class2008 Class –Reference list from courseReference list from course Rood Blog Data Base

3. Projects Final presentation discussion; –April 22, 12:00 – 4:00, Place TBD. After class meetings –4/6: Near-term solutions –4/8: Michigan’s response –4/13: Transportation –4/15: Near-term solutions

4. Events Jim Hansen Global Climate Change What Must We Do Now? –April 6, 2010 –Blau Auditorium, Ross School of Business, –Time: 4:00 - 5:30, Reception following Interest is high. Seats for sure, arrive 3:45

5. Events Pollack and Rood, Author’s Forum –A World Without Ice: A Conversation with Henry Pollack & Richard Rood Wednesday, April 14, 2010 5:30PM Library Gallery, room 100, Harlan Hatcher Graduate Library –For more info visit www.lsa.umich.edu/huminwww.lsa.umich.edu/humin

6. News of Climate Interest New Federal Automobile Mileage StandardsNew Federal Automobile Mileage Standards Off-shore drilling and national security

7. Readings on Local Servers Assigned Readings –Dembach: Climate Change Law: An IntroductionDembach: Climate Change Law: An Introduction Very important Reading –Farber: Legal Status of Climate ModelsFarber: Legal Status of Climate Models

8. Readings on Local Servers Assigned –Supreme Court: Massachusetts versus EPASupreme Court: Massachusetts versus EPA –Sigman: Liability and Climate PolicySigman: Liability and Climate Policy Of Interest –Massachusetts Petition to the U.S. Supreme CourtMassachusetts Petition to the U.S. Supreme Court –US Govt Response to Massachusetts PetitionUS Govt Response to Massachusetts Petition Foundational Reading –University of Pennsylvania Law Review (2007)University of Pennsylvania Law Review (2007)

9. From Last Time Kyoto and why it is still relevant … –Kyoto Protocol did set the foundation for a market- based approach to control CO 2 –Raised the level of attention to mitigation of climate change –Encouraged strategies to avoid deforestation Refine relation of development and responding to climate change –Reduced CO 2 emissions from what they might have been –Define political positions – positive and negative

10. Beyond 2012 Pew: International Climate Efforts Beyond 2012: Report of the Climate Dialogue at Pocantico Pew: International Climate Efforts Beyond 2012: Report of the Climate Dialogue at Pocantico –This is a report published by Pew of a collection of experts on climate change –It is very soft in its recommendations Like keep the international community together Identification of what is important in any viable treaty Important problem, keep international attention

11. Beyond 2012 Conference of Parties, Copenhagen 2009 Copenhagen Accord

12. Scales: Time scale and “spatial” scale GREEN HOUSE GAS INCREASE SURFACE WARMING GLOBAL CONSEQUENCES GLOBAL POLICY (MITIGATION) LOCAL POLICY (ADAPTATION)

13. Scale What is the best scale to measure vulnerability and adaptive capacity? –National: inform states on needed policy response; allow for better decision making; allows for comparison of differential vulnerability –Regional Impacts are likely not to be defined by national borders –Local Ground truth Allows for the understanding of the local factors that mediate sensitivity and resilience Thanks to Maria Carmen Lemos

14. Regional based Initiatives Changing very rapidly Prone to a bubble burst? Pew Center on Global Climate Change –State and Regional UpdatesState and Regional Updates

15. Scales of Policy: U.S. –Pew: State-based Initiatives (Update, 2007)Pew: State-based Initiatives (Update, 2007) Y Y Y Y Y Pew: Interactive State Emission Goals

16. Basic constraint on carbon policy 1990 by 2020

17. Motivations for State Activity Economics –States (and cities) are very aggressive at promoting policy that they perceive as offering economic advantage. –Branding: To attract, for instance, the “creative class” Belief and Culture –Reflection of political constituencies

18. States can be viewed as: (from Rabe (2006)) What has changed? Hostile to climate change policy –Michigan (Auto industry, manufacturing) –Colorado (coal and energy) Stealth interest? –Texas (aggressive renewable portfolio) –Nebraska (sequestration site) Out in front –California (Water, water, water?) –Northeast alliance

19. Policy: Regional and State and Local California Climate Change Regional Greenhouse Gas Initiative United Conference of Mayors –U.S. Mayors: Climate Protection AgreementU.S. Mayors: Climate Protection Agreement Map of US Mayors Climate Protection Agreement Cool Cities

20. Policy: Regional and State and Local Local Governments for Sustainability –International Council for Local Environmental Initiatives (ICLEI)International Council for Local Environmental Initiatives (ICLEI) –ICLEI’s CO2 Reduction / ClimateICLEI’s CO2 Reduction / Climate National Governors Association (NGA) –NGA Transportation and Land UseNGA Transportation and Land Use –NGA Environmental Best PracticesNGA Environmental Best Practices

21. Regional-National-Global Policy Policy often starts on a local scale, for the reasons, outlined above Fragmented policy often interferes with business and trade Call for national policy to remove the fragmentation –Interstate commerce in the U.S. –World Trade Organization Internationally?

22. The Uncertainty Fallacy That the systematic reduction of scientific uncertainty will lead to development of policy is a fallacy. –Uncertainty can always be used to keep policy from converging.

23. Motivators for Policy More is needed than scientific knowledge to motivate the development of policy. –A policy accelerator or catalyst is needed to promote convergence of policy. Apparent benefit Excess risk –What are important sources of benefit and risk? What are the policy accelerators?

24. Brief return to Economics We introduced the idea of “dangerous” climate change –We ended up using a report on economics to define dangerous Argue over discount rate and valuation of the environment, and how much it will really cost. –What are other ways to define dangerous?

25. The role of economics An assertion: When thinking about responding to climate change we often first think of policy. When we think about how to promote policy where do our thoughts first land? –Conservation? –Public Health? –Water Resources? –Agriculture? –Economics? – …

26. From Class NOTES Economy – climate change impacts security, leads to uncertainty in economic system, agriculture, energy security Economy – when economy is bad climate change takes back burner, energy security, national security, green energy Leadership change Disasters – how good is the data, can we make attribution, link to climate change Process takes longer – short term dominate, long term Framing as opportunity More … ?

27. The convergence to economics Conservation, public health, etc., touch economy. Hence it is sensible to place attention on the economics of climate change. –Production, Distribution, and Consumption of goods and services –Macroeconomics is generally the summation of the economy of states, regions, countries, world. Measured broadly by gross domestic product

28. Where we sit at a national level SEC. 16__. SENSE OF THE SENATE ON CLIMATE CHANGE. (2005) (a) Findings.—Congress finds that— 1)greenhouse gases accumulating in the atmosphere are causing average temperatures to rise at a rate outside the range of natural variability and are posing a substantial risk of rising sea-levels, altered patterns of atmospheric and oceanic circulation, and increased frequency and severity of floods and droughts; 2)there is a growing scientific consensus that human activity is a substantial cause of greenhouse gas accumulation in the atmosphere; and 3)mandatory steps will be required to slow or stop the growth of greenhouse gas emissions into the atmosphere. (b) Sense of the Senate.—It is the sense of the Senate that Congress should enact a comprehensive and effective national program of mandatory, market-based limits and incentives on emissions of greenhouse gases that slow, stop, and reverse the growth of such emissions at a rate and in a manner that— 1)will not significantly harm the United States economy; and 2)will encourage comparable action by other nations that are major trading partners and key contributors to global emissions.

29. Economy We have built economy into our response to climate change. States cite economic incentives as a reason for developing policy.

30. Global economic analysis –Stern Review: Primary Web PageStern Review: Primary Web Page –Stern Report: Executive SummaryStern Report: Executive Summary –Nordhaus: Criticism of Stern ReportNordhaus: Criticism of Stern Report –Tol and Yohe: Deconstruction of Stern ReportTol and Yohe: Deconstruction of Stern Report

31. Stern Report Draws on recent science which points to ‘significant risks of temperature increases above 5°C under business-as-usual by the early part of the next century’ — other studies typically have focused on increases of 2–3°C. Treats aversion to risk explicitly. Adopts low pure time discount rates to give future generations equal weight. Takes account of the disproportionate impacts on poor regions.

32. Dangerous climate change? Stern, 2006

33. Stern Report Considered a radical revision of climate change economics. –If we don’t act now it will cost between 5% and 20% of gross domestic product (an aggregate measure of economy.) Stands in contrast to many studies that usually come to numbers of closer to 1% –The idea that initiation of a policy with a slow growth rate will have little impact on the economy or environment in the beginning, but will ultimately become important when the nature of expenditures is more clear.

34. Stern Report included very small discount rate. The discount rate of Stern Report is very small. (Represents high valuation of ethical issues. Assumptions about value of environment.) (represented qualitatively by the red line)

35. Impact of low discount rate Amplifies the impacts of the decisions we make today. –Note: Even a 1% discount rate over 100 years generally leads to the conclusion that what we do today does not matter to the economy. Also brings attention to our poor explicit valuation of the environment.

36. Stern Review: Criticisms Document is fundamentally political: An advocacy document. Not up to the standards of academic economic analysis Not based on empirical observations of the economy –Observed discount rates –Observed behavior

37. Strengths of Stern Review Explicitly linked economic goals and environmental goals –Considered a major flaw of the Kyoto Protocol (Recall: Kyoto did include market mechanisms) Showed explicitly the necessity of having the cost of carbon dioxide, the cost of greenhouse gases, the valuation of the environment in environmental policy.

38. Return to the interface with policy

39. Climate Science-Policy Relation CLIMATE SCIENCE KNOWLEDGE UNCERTAINTY POLICY PROMOTES / CONVERGENCE OPPOSES / DIVERGENCE

40. Economics-Policy Relation ECONOMIC ANALYSIS KNOWLEDGE UNCERTAINTY POLICY PROMOTES / CONVERGENCE OPPOSES / DIVERGENCE Economic analysis is not the compelling catalyst to converge the development of policy – at least on the global scale. Different story on the local scale.

41. Think for a minute What are the things that we do that connect us together?

42. Energy-Economy-Climate Change ENERGYECONOMY CLIMATE CHANGE THESE THREE ARE BIG WHAT ARE THEIR ATTRIBUTES? ______________________________ HOW ARE THEY RELATED? ______________________________

43. A moment with time scales 25 years 50 years75 years100 years0 years ENERGY ECONOMY CLIMATE CHANGE

44. We keep arriving at levels of granularity TEMPORAL NEAR-TERMLONG-TERM SPATIAL LOCAL GLOBAL WEALTH Small scales inform large scales. Large scales inform small scales.

45. Back to: What are the things that connect us together?

46. Things that permeate society Law also permeates society. There are some significant consistencies in law. But also there are remarkable differences in law.

47. From Farber: Legal Status Climate models establish a lower end estimate for global temperature impacts, but the distribution is less clearly bounded on the high side – or in simpler terms, the high- end risk may be considerable. The models are better at predicting temperature patterns than precipitation patterns, and global predictions are considerably firmer than more localized ones. Economic models are much less advanced, and their conclusions should be used with caution. Unfortunately, economists are not always careful about incorporating uncertainty into their policy recommendations.

48. From Farber: Legal Status Climate scientists have created a unique institutional system for assessing and improving models, going well beyond the usual system of peer review. Consequently, their conclusions should be entitled to considerable credence by courts and agencies. Model predictions cannot be taken as gospel. There is considerable residual uncertainty about climate change impacts that cannot be fully quantified. The uncertainties on the whole make climate change a more serious problem rather than providing a source of comfort. The policy process should be designed with this uncertainty in mind. For instance, rather than focusing on a single cost-benefit analysis for proposed regulatory actions, the Office of Management and Budget (OMB), which oversees federal regulatory policy, might do better to require the development of standardized scenarios for agencies to use.

49. In the past couple of years The picture of polar bears in the sea motivated a lot of discussion about the Endangered Species Act... –but, legal approaches have a difficult path,cause and effect, who are the damaged and damaging parties, what laws are relevant... Polar Bear as Endangered Species

50. So what are the legal pathways? Public nuisance Clean Air Act National Environmental Policy Act Federal policy of pre-emption –Less stringent federal regulations rather than more stringent state regulations Like tobacco liability litigation Like gun liability litigation Endangered Species Act

51. National Environmental Quality Act (1969) Purpose Sec. 2 [42 USC § 4321]. The purposes of this Act are: To declare a national policy which will encourage productive and enjoyable harmony between man and his environment; to promote efforts which will prevent or eliminate damage to the environment and biosphere and stimulate the health and welfare of man; to enrich the understanding of the ecological systems and natural resources important to the Nation; and to establish a Council on Environmental Quality.

52. What are the obstacles? Political Question / Judicial Competence –Court being asked, essentially, to make policy Standing –The ability to show particular, or personal harm. Causation –Demonstration that a particular, say, power plant or manufacturer has caused the harm

53. An interesting set of papers The complete issue of University of Pennsylvania Law Review (Vol, 155, 2007) –Intersection of climate science, economics, and law. University of Pennsylvania Law Review (2007)

54. A case that received a lot of attention Connecticut versus American Electric Power –Public nuisance –Determined that court was being asked to address what was essentially a policy question. Senator Imhoff a principal in having the case thrown out

55. A case that continues to attract attention Massachusetts versus US Environmental Protection Agency –Clean Air Act

56. A case that continues to attract attention Relevant text of Section 202(a) of the Clean Air Act” "The Administrator [of EPA] shall by regulation prescribe... standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines, which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare." Section 302(g) of the Clean Air Act defines "air pollutant" as "any air pollution agent or combination of such agents, including any physical... substance or matter which is emitted into or otherwise enters the ambient air." 302(h) states that "effects on welfare" include "effects on soils, water, crops,... wildlife, weather... and climate...”

57. California and Clean Air Act When the Clean Air Act was written California was given the ability to make more stringent standards. –States can choose either the California standard or the less stringent national standard (A motivator for federal policy is often the existence of many state and local policies.)

58. Supreme Court Decision Supreme Court found in favor of Massachusetts –Had argued that they were threatened by sea level rise. There was standing. –Had argued that carbon dioxide was a pollutant. Supreme Court said carbon dioxide is a pollutant based on the definition in the Clean Air Act. –EPA did have the regulatory authority to regulate CO 2.

59. Bush EPA Arguments That to control carbon dioxide from cars was an issue of efficiency, which was the sole domain of the Department of Transportation. That for the EPA to act would be a piecemeal approach to the problem, against the President’s wishes. That taking action on cars would have no real effect because of other sources of CO 2, including China. That there was a political history that precluded EPA from acting.

60. Since then California Attorney General Petition to EPACalifornia Attorney General Petition to EPA –“Global warming threatens California's Sierra mountain snow pack, which provides the state with one-third of its drinking water. California also has approximately 1,000 miles of coastline and levees that are threatened by rising sea levels.”

61. Since then 2008: EPA has not, formally, taken action, and even their own lawyers have been quoted in the press as saying that EPA is not on solid legal grounds for doing nothing. –A political decision. 2009: EPA Pressing using Clean Air Act to regulate CO 2EPA Pressing using Clean Air Act to regulate CO 2

62. Where does litigation sit in the climate problem? Motivator for the development of policy. Law works on short-term and local scales. –Does not, often, extend to long-term and global scales. Deliberative, case-by-case

63. Law vs Policy Law, at least with U.S. EPA, leads to the idea of regulation. –In general, “people” prefer policy to regulation  business risk? Currently in U.S. Obama is pushing EPA to exercise its ability to regulate CO 2 as a pollutant. –Bush administration did not require EPA to do this

64. Some recent activity block the EPA see also And a group of Senators are looking to propose something different from a cap and trade market ( more ).

65. Exponential Growth and Decay

66. Exponential Growth U.S. views 2-3% Growth / year as a Stable Economy Consider this gross domestic product (GDP) Do you know the rule of 72?

67. Exponential Discount This is how we discount the value of investments into the future.

68. Exponential Discount This is how we discount the value of investments into the future. How to value future return on investment versus near-term focus on investment.

69. Exponential Discount Economic growth versus discount In general. must also account for inflation or deflation

70. Exponential Discount Real growth of wealth must address the loss of wealth through inflation, taxes, discounting.