{"id":10275,"date":"2018-03-12T20:42:26","date_gmt":"2018-03-12T20:42:26","guid":{"rendered":"http:\/\/www.environment-hawaii.org\/?p=10275"},"modified":"2018-03-12T20:45:47","modified_gmt":"2018-03-12T20:45:47","slug":"economists-attempt-to-quantify-potential-for-greenhouse-gas-reduction-in-hawaii-2","status":"publish","type":"post","link":"https:\/\/environment-hawaii.org\/?p=10275","title":{"rendered":"Economists Attempt to Quantify Potential For Greenhouse Gas Reduction in Hawai\u2018i"},"content":{"rendered":"
\n
\n
\n

Last year, economists with the consulting firm McKinsey & Co. released their analysis of what it would cost to abate green- house gas emissions in the United States. The December 2007 report \u2013 Reducing U.S. Greenhouse Gas Emissions: How Much at What Cost? \u2013 examined all of the world\u2019s industries and, using a maximum cost of 40 Euros\/ton above business-as-usual costs, de- termined how much greenhouse gas abate- ment could reasonably be achieved in the United States by the year 2030. The report, which evaluated some 250 different abate- ment options, concluded that based on an abatement cost of $50\/ton (using a now- hopelessly outdated conversion rate of $1.20 to one Euro) of greenhouse gas and an oil cost of $60\/barrel (also a figure the world is un- likely to see again), the United States could reduce its greenhouse gas emissions in 2030 by 3 to 4.5 billion tons using proven or high- potential technologies.<\/p>\n

Shortly after the report\u2019s release, the U.S. Department of Energy asked McKinsey to do a similar analysis for Hawai\u2018i as part of the Hawai\u2018i Clean Energy Initiative, a DOE- State of Hawai\u2018i project aimed at boosting renewable energy use and decreasing energy demand so that by 2030, 70 percent of the state\u2019s energy will come from clean sources. On June 5, a team from McKinsey presented that analysis to the state Greenhouse Gas Emissions Reduction Task Force, whose job it is to help the state reduce its emissions to 1990 levels (18.4 megatons) by 2020.<\/p>\n

The McKinsey report, \u201cReducing Hawai\u2018i\u2019s Oil Dependence and Greenhouse Gas Emissions,\u201d states that Hawai\u2018i can go farther and faster than the rest of the country when it comes to reducing its greenhouse gas emissions because it need not rely on a large number of untested technologies. Using the top ten technologies, McKinsey\u2019s Matt Rogers<\/p>\n<\/div>\n

\n

told the task force, Hawai\u2018i can achieve 80 percent of its emission reduction potential.<\/p>\n

While Rogers said Hawai\u2018i\u2019s small size allowed the analysis to be very specific, McKinsey\u2019s Nicholas Hodson warned that the analysis is not meant to be \u201cspot-on accurate.\u201d Its main goal was to evaluate a range of technologies in a consistent manner. Hodson said that some of the factors absent from the analysis are international and ma- rine travel and \u201cimported carbon,\u201d which is the carbon dioxide emitted during produc- tion of imported goods. Calculating imported carbon, Hodson said, \u201cgets really compli- cated really fast.\u201d Also not included in the analysis are the costs of policy implementa- tion, dynamic impacts of carbon prices, changes in consumer lifestyles or behavior, and broader societal costs or benefits.<\/p>\n

Given those caveats, Hodson said that by 2030, Hawai\u2018i could reduce its annual oil imports under a \u201cmid-range case\u201d by 17 mil- lion barrels. Under a \u201chigh-range\u201d case, that number jumps to 30 million barrels. Today, Hawai\u2018i imports more than 40 million barrels of oil a year and, according to the McKinsey report, that number will grow to more than 60 million barrels by 2030 if the state doesn\u2019t change its energy sources or curb its demands.<\/p>\n

Under a business-as-usual scenario, Hawai\u2018i would emit 31 megatons per year of greenhouse gas. However, Hodson said, those emissions could be reduced by 7.8 megatons a year under a mid-range scenario and 13 megatons in a high-range. To put things yet another way, the state could achieve a reduc- tion of 28 percent of its carbon-based energy demand under a mid-range scenario, and a 48 percent reduction under a high-range.<\/p>\n

McKinsey representatives noted their analysis was based on oil costing less than half its current price (around $140 a barrel in mid-July). They said that as the price of oil in- creases, so do savings associated with abatement, while the price of renewable resources stays the same.<\/p>\n

\n
\n
\n

\u201cIn some ways, [these scenarios represent] an insurance policy to hedge against the high price of crude oil,\u201d said McKinsey\u2019s Brandon Davito.<\/p>\n

For Ted Peck of the state Department of Business, Economic Development, and Tourism\u2019s Energy Planning and Policy branch, the study puts to rest any doubt that greenhouse gas emission abatement is eco- nomically infeasible.<\/p>\n

\u201cThere\u2019s been a lot of discussion about how it\u2019s going to be so expensive to abate greenhouse gases. If you look at the report, it\u2019s hard to conclude that that\u2019s going to be the case. The cost curve is based on $60 a barrel of oil…. Even if you take the things that would cost $150\/ton of greenhouse gas…all of that today is in the money,\u201d he said. \u201cWe are going to be able to abate greenhouse gas and it\u2019s not going to cost us an arm and a leg.\u201d<\/p>\n

Technologies<\/p>\n

What kinds of changes must Hawai\u2018i make under these scenarios?<\/p>\n

The medium case calls for the implemen- tation of 45 different technologies, while the high case includes 56. In both cases, businesses and residents throughout the state need to immediately switch to energy-efficient elec- tronics and lighting. McKinsey\u2019s abatement curve shows that the top five most cost-effective abatement measures, which each save about $150 for each metric ton of green- house gas saved, fall under energy-efficient commercial and residential electronics and lighting.<\/p>\n

\n
\n
\n
\n

More efficient transportation and appli- ances also save money. Solar, geothermal, gas recovery from landfills, and hydropower, among other renewable energy sources, are also included in the mix, as well as afforesta- tion (planting forest where none has histori- cally grown, such as on pasture and crop land) and reforestation. Biodiesel from algae, biokerosene, ocean thermal energy conver- sion, electric vehicles, biomass gasification, and carbon capture and sequestration were some of the technologies excluded from the analysis because they face technological and\/ or commercial obstacles.<\/p>\n

Biofuel production plays a major role in the analysis and accounts for the largest emis- sion reductions in both mid- and high-range cases. The report assumes that all existing sugarcane would be used for ethanol produc- tion and that sugarcane-based biofuel pro- duction would max out at the 1969 levels of sugarcane production. In the high case, they<\/p>\n<\/div>\n

\n

estimated 360,000 acres of sugarcane would be used for ethanol production in addition to cellulosic biofuel production on the Big Is- land.<\/p>\n

The report also assumed that there would be significant increases in plug-in hybrid vehicles powered by renewables, and that wind power would be developed on Lana\u2018i. Under the high case, wind-generated elec- tricity from Maui County would be trans- mitted to O\u2018ahu via an undersea cable.<\/p>\n

Obstacles<\/p>\n

At the task force\u2019s June and July meetings, members questioned the report\u2019s assump- tions about the potential for biofuel produc- tion using sugarcane. One member noted that meeting the water requirements for the acreage proposed would be an obstacle. And task force chair Larry Lau, deputy director of the state Health Department\u2019s Environmen- tal Management Division, questioned whether planting 360,000 acres of sugarcane can even be done anymore.<\/p>\n

Regarding water issues, Rogers said that allocation, not the quantity of water, is the binding constraint in Hawai\u2018i and that for all<\/p>\n<\/div>\n

\n

of the technologies, policy decisions have to be made on what the trade-offs will be. Hodson added that water infrastructure is a very significant issue, and according to Davito, it would cost $20 million to bring the required irrigation systems \u201cback up to a functional level.\u201d<\/p>\n

In response to Lau\u2019s question, Davito explained that the biofuel projections as- sumed a \u201cfriction-free environment\u201d and that sugarcane acreage was based on figures in a report done by the Hawai\u2018i Natural Energy Institute. Davito said that such production was \u201cfeasible, but it would require a signifi- cant amount of dedication on the part of the state to reach that level.\u201d To this, Lau said that in addition to water issues, a lot of the land that was once used for sugarcane production has been urbanized or is being used for diver- sified agriculture.<\/p>\n

Lau also asked whether any technological breakthroughs needed to be made to trans- mit electricity between islands with a cable. Davito said that the cable that would connect Maui to O\u2018ahu would be similar to those connecting Scandinavian countries to Ger- many and the Tory Islands to British Columbia. He added that an O\u2018ahu-Kaua\u2018i or Maui-Hawai\u2018i cable would also be technologically feasible, but he was not sure of the cost for those.<\/p>\n

\n
\n
\n
\n

Task force member and Hawai\u2018i Sierra Club executive director Jeff Mikulina noted that the most cost-effective abatement tech- nologies \u2013 things like switching to energy- efficient light bulbs \u2013 were not constrained by permitting or natural resource issues, which led one member of the public to ask what was preventing people from using efficiency tech- nologies since they seemed to be a goldmine of savings.<\/p>\n

Rogers said that, in part, the high initial cost of the technologies is to blame.<\/p>\n

\u201cA new home builder will not put in the extra $2,000 to install energy-efficient fix- tures that may save the buyer many times that over time because he\u2019ll lose the sale to a neighboring builder who didn\u2019t put them in. No manufacturer wants to be the first to incorporate a new technology because it\u2019s more expensive. If it\u2019s a standard, they\u2019ll put it in,\u201d he said. He added that observations of the industrial sector suggest that if a manufac- turing plant saves energy in one area, the savings are seen in a different area. \u201cSo the incentive for a unit manager to save energy is<\/p>\n<\/div>\n

\n

not there. Companies with an energy czar that\u2019s looking over the whole thing actually capture the benefits more than those in which each section\u2019s energy use is overseen by sec- tion managers. Those are some of the reasons efficiency opportunities still linger,\u201d he said.<\/p>\n

Feasibility questions aside, could Hawai\u2018i meet its legislative mandate to reduce green- house gas emissions to 1990 levels by 2020 under either of McKinsey\u2019s scenarios? Ac- cording to Davito, Hawai\u2018i would slightly exceed 1990 levels for greenhouse gas under the medium case. However, in the high case, \u201cHawai\u2018i would be able to achieve 13 megatons of abatement, which gets…slightly under the levels of 1990,\u201d excluding emissions from international and marine travel, he said.<\/p>\n

Mikulina pointed out that McKinsey\u2019s analysis used 2030 as its goal date, while the state\u2019s deadline under 2007\u2019s Act 234 is 2020. In response, Davito admitted that while the high case analysis suggests that at 2030 Hawai\u2018i should be at 1990 emission levels, \u201cIt\u2019s unclear whether you could make that level by 2020.\u201d<\/p>\n

The report notes that if abatement options that cost more than $50 a ton are imple- mented, \u201cHawai\u2018i would be well below 1990 GHG (greenhouse gas) levels\u201d by 2030.<\/p>\n<\/div>\n

\n

The Right Approach<\/p>\n

Implementing either of McKinsey\u2019s scenarios would be a struggle, to say the least. Still, Rogers said, Hawai\u2018i is in a better position to reduce its oil consumption and greenhouse gas emissions than the rest of the country, since Hawai\u2018i has more natural resources and proven technologies to work with.<\/p>\n

\u201cThis isn\u2019t trying to launch 250 initia- tives,\u201d Rogers said. \u201cIt\u2019s really launching a finite set of initiatives that actually move along well…The question is what is the right approach to developing local ethanol, wind, and geothermal resources, because capturing those relatively quickly provides a foundation for doing a set of these other things.\u201d<\/p>\n

Transmission and distribution infrastruc- ture upgrades are key, he said, particularly for things like electric hybrid vehicles that are powered by renewable resources and \u201cfurther out\u201d approaches, such as algae-based biodiesel and wind technologies that \u201cmay come into the money in the next 20 years.\u201d<\/p>\n

With regard to ethanol, task force member and former Matson Navigation Co. senior vice president Gary North said his company had just helped the Legislature pass a bill for $618 million in port upgrades, which don\u2019t include any ethanol-related facilities.<\/p>\n

\n
\n
\n

\u201cI think that clearly, if you\u2019re going to be running ethanol from Maui and Kaua\u2018i and from the Big Island, you\u2019re going to need huge amounts of investment [in harbor facilities]…In Kahului there\u2019s basically no place to go and Kawaihae [on Hawai\u2018i] there\u2019s is someplace to go but [it needs] a lot of invest- ment,\u201d as does Kaua\u2018i, he said. \u201cYou really need to look at those numbers if you\u2019re going to grow that much sugarcane and make that much ethanol.\u201d<\/p>\n

Without a clear and consistent policy framework, questions about who\u2019s paying and how costs and benefits are distributed will result in the continued delay of economically and environmentally attractive investments, Rogers said.<\/p>\n

For Hawai\u2018i, the motivation to establish such a framework is clear, Rogers said: \u201cYou get a double whammy: You get declining revenues because people stop flying when energy prices are high and stop coming, and you get higher costs at exactly the same time…. The question is, can you substitute some capital today to essentially protect you against that risk going forward and at the same time capture some significant environmental benefits and really provide a leadership model for what the rest of the United States is going to be wrestling with?\u201d<\/p>\n

\n
\n
\n

While Lau told Environment Hawai\u2018i that the Sunshine Law bars him from speak- ing in detail about how the task force plans to use the McKinsey report, he confessed that \u201cit\u2019s too early to say [how it will be used]. I\u2019d probably want to take up some of the issues with the [task force\u2019s] analysis committee.\u201d<\/p>\n

As an individual, Lau said he found the report, \u201cvery stimulating, just the idea of the relative cost or savings from various options and the amount of energy involved with each. People can argue the details, but it would be important to look at major trends in the analysis. Obviously if we can save with efficiencies, we should be pushing for those things.\u201d Echoing his earlier comments to McKinsey, Lau added that he was \u201cvery curious\u201d about the feasibility of reinstitut- ing large-scale agriculture for biofuel and said he had \u201cthoughts on the fact that the greatest reduction in emissions comes from biofuel production and that the acreage is based on peak sugar numbers.\u201d<\/p>\n

\n
\n
\n

DBEDT\u2019s Peck notes that McKinsey\u2019s report is just a projection, an approxima- tion, and that the state\u2019s bioenergy master plan, which is currently being drafted, will fill out a lot of the uncertainty about biofuels. He said that while a study released earlier this year stated that biofuels weren\u2019t reduc- ing emissions, \u201cit compared pristine rainforests to cutting [them] down and planting biofuels. We have a lot of fallow land that isn\u2019t sequestering any greenhouse gas.\u201d<\/p>\n

\u201cThe devil is in the details. We have a lot of things in front of us,\u201d he said, adding that there will be tradeoffs and there has been a lot of discussion with DOH and the task force about systemic changes needed.<\/p>\n

\u201cIt\u2019s analogous to critical infrastructure built years ago. Buildings built by the mili- tary and government were not built with security in mind….Greenhouse gas applica- tions are not incorporated in the planning process yet at a systemic level,\u201d he said. For example, \u201cMunicipal solid waste is an area where a lot of decisions are being made on all islands without thought to greenhouse gas emissions,\u201d he said.<\/p>\n

\u2014 Teresa Dawson<\/p>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

Last year, economists with the consulting firm McKinsey & Co. released their analysis of what it would cost to abate green- house gas emissions in the United States. The December 2007 report – Reducing U.S. Greenhouse Gas Emissions: How Much … Continued<\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[23],"tags":[3],"class_list":["post-10275","post","type-post","status-publish","format-standard","hentry","category-august-2008","tag-teresa-dawson"],"_links":{"self":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/10275","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=10275"}],"version-history":[{"count":0,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=\/wp\/v2\/posts\/10275\/revisions"}],"wp:attachment":[{"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=10275"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=10275"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/environment-hawaii.org\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=10275"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}