Michigan at a Climate Crossroads: Strategies for Guiding the State in a Carbon Constrained World

Start Date: 
Oct 13, 2005
End Date: 
Feb 28, 2007
Collaborator: 
Michigan Department of Environmental Quality
Michigan Environmental Council
Summary: 

The overall project objective is to examine and recommend strategies for reducing greenhouse gas (GHG) emissions in the State of Michigan.  GHG emissions and economic analyses will serve as a basis for multi-stakeholder recommendations for the State of Michigan.


Timeframe:  January 2006 - December 2006

 

Background
The inventory of greenhouse gas emissions conducted through a 2004-2005 Master's Project at the University of Michigan indicates that greenhouse gas emissions rose 9% from 1990 to 2002.  In 2002, 33% of Michigan greenhouse gas emissions resulted from the production of electricity in the state, 26% resulted from transportation, with industry contributing an additional 17%.   This inventory highlights opportunities for action and provides a baseline for measuring progress.

Across the United States, state and local governments are leading efforts to develop policy approaches to greenhouse gas emissions management.  As of 2004, 29 states had developed State Action Plans (also referred to as Climate Action Plans) specifically targeting greenhouse gas emissions reductions.  Additionally, several states including California and New York are pursuing more sweeping legislative action regarding greenhouse gases.  For example, California Governor Arnold Schwarzenegger signed an executive order on June 1st calling for greenhouse gas emissions reduction to 80% below 1990 levels by 2050.
This project will provide a blueprint for Michigan to become a leader on climate change policy for the Midwest.  Project results should serve as a basis for developing targets similar to those proposed by California.  A responsible economic development strategy for Michigan should reflect the impact of impending federal policies to reduce emissions of carbon dioxide, policies such as a mandatory cap-and-trade or tax on these emissions.  Aggressive action can stimulate and encourage clean energy technology innovations and efficiency improvements that should provide significant economic benefits to the State.

Project Plan
Objectives
Building on legislative and voluntary actions in other states, this project will set forth a plan for the State of Michigan to examine potential strategies and initiatives that respond to and capitalize on federal greenhouse gas regulations.  Expected results include an assessment of both the emissions reduction potential and estimates of potential economic benefits of various strategies.  Specific project goals are as follows:
-  Identify potential strategies and initiatives for GHG management in Michigan
-  Estimate expected emissions reduction benefits of the selected strategies
-  Assess the potential economic benefits of proactive carbon management in Michigan
-  Examine opportunities for economic development through clean technology

Task Overview
Task 1.    Identify and select emission reduction strategies warranting further analysis
Forum 1.      Convene stakeholders to screen strategies for Tasks 2 and 3
Task 2.    Evaluate emission reduction potential for identified strategies
Task 3.    Assess the costs, benefits and job creation potential of each identified strategy
Forum 2.      Reconvene stakeholders to review Tasks 2 and 3 assessment results and make recommendations for CAP implementation

Task 1. Strategy Identification
In response to the growing challenge of climate change, numerous voluntary programs, initiatives, requirements, and regulations for greenhouse gas reduction have been proposed and implemented by states, including Michigan, over the past several years.  These programs provide a wide range of possible opportunities for greenhouse gas reductions.  With numerous states now pursuing greenhouse gas emissions reductions, the examples of existing programs continues to grow.  Existing programs can be grouped into those that are energy related, including supply side management (e.g., transportation fuels and electricity generation) and demand side management (e.g., transportation patterns and building design), and those that are related to non-fuel carbon.  Several examples of carbon emissions management strategies at the state level include :
-    voluntary industry performance improvement programs (e.g., Green Tier in Wisconsin)
-    industry performance improvement loan programs (e.g., the Industrial Energy Efficiency Fund in Indiana)
-    transportation fuel standards (e.g., bio-diesel requirements in Minnesota)
-    renewable portfolio standards (e.g., Texas Renewable Energy Mandate Rule)
-    net metering requirements (35 states have implemented requirements)
-    tax incentive programs for renewable energy (e.g., West Virginia tax code adjustments)
-    carbon cap and trade programs (Northeast States for Coordinated Air Use Management -nine states; California exploring possibilities; three municipalities trading on the Chicago Climate Exchange)

In addition, initiatives outlined in the Governor's Executive Order 2005-4 focusing on energy efficiency in State facilities and operations will also be analyzed for their emissions reduction potential.  These and other example programs will provide the menu from which a selection of programs with possible applications in Michigan can be made.  Options from each sector of the economy (e.g., electricity, buildings, transportation, industry) as well as new energy supply technologies will be evaluated.  The University will convene a forum of key stakeholders from business and industry, NGO’s, government and academia to facilitate the selection of emissions reduction strategies for further analysis in Tasks 2 and 3.  The selection of strategies will address two criteria: emissions reduction and job creation.


The Michigan at a Climate Crossroads project (MCCP) team has been building on the success of Forum I, held on January 31, 2006.  Out of Forum I, Michigan's stakeholders provided the MCCP Team with a list of ten greenhouse gas emission reduction strategies.  The stakeholders prioritized these strategies as having the most GHG reduction potential while expressing interest in understanding the economic impacts of such strategies.  Table 1 presents the ten prioritized strategies that emerged from the Forum I.

Table 1.  Ten Prioritized GHG Reduction Strategies.*
1    Renewable Portfolio Standard/ Clean Energy Portfolio
2    Demand-Side Management
3    Alternative Fuel Infrastructure/ Flex/Bio Fuels
4    Carbon Sequestration/ Soil Management
5    Revise Building Codes/LEED or Energy Star
6    Mass Transit Enhancement and Development
7    Production Tax Credit for Renewables/ Net Metering
8    Tax Credit for Alternative Vehicles Technologies
Incentives for Production and R&D
9    Tax Incentive Programs
*Note that Biofuels was a stand alone strategy coming out of Forum I that the MCCP team chose to consolidate into strategy 3.  As such we maintain this as our list of ten strategies.

Task 2. Emissions Reduction Potential
This analysis will take the identified strategies in Task 1 and evaluate emissions reductions that are possible rather than following a "business as usual" path.  The recently completed greenhouse gas emissions inventory provides a definitive baseline and a consistent methodology and assumptions to calculate emissions reductions.  The inventory model follows the standard US EPA Emission Inventory Improvement protocol.  The use of scenarios for technology penetration, changes in demand, and other variables combined with statistical analyses such as Monte Carlo will provide a robust understanding of expected emission reduction benefits for each strategy.  The US EPA's States Guidance Document: Policy Planning to Reduce Greenhouse Gas Emissions will also be utilized for organizing results in a format to aid policymakers.


Task 3. Potential Economic Benefits
Michigan's economy must be prepared to compete within the context of a national carbon policy. Given such policy, what are the economic impacts of business as usual versus a proactive strategy for maximum job growth?  Many greenhouse gas management programs can provide economic development opportunities.  For example, a recent assessment by the Renewable Energy Policy Project (REPP) found that the development of a strong market for wind power in the US could create 8,549 jobs in Michigan.  The REPP assessment also found that Michigan is the second leading state in terms of employment potential in the area of wind power rotor manufacturing.   This task will include an assessment of costs and benefits of each strategy, and their job creation potential.

A second forum was convened to review and discuss the proposed strategies based on the emissions reductions from Task 2 and the economic benefits determined in Task 3.  Specific recommendations prioritizing these strategies will be developed as an outcome of this forum.  Overall this project will provide the data and information required to evaluate and rank possible strategies for greenhouse gas emissions reduction in Michigan.  These results will enable the state leaders to better position Michigan for success in addressing the challenges of global climate change.

Sponsor: 
Energy Foundation
National Environmental Trust
University of Michigan - Erb Institute for Global Sustainable Enterprise
Keyword: 
GHG
Greenhouse Gas
Climate Change
Climate Policy
Policy