Booth (1), on the other hand, believes that permits issued on an individual basis rather than by country would be more effective: Permits could be domestically distributed annually on a per person basis equal in amount to existing emissions initially, and then reduced by 3.6 percent of the initial amount each year over a phase-in period of approximately 25 years to arrive at a 90 percent total reduction. Individ- uals who don’t need the full allocation for their own energy consumption could sell their surplus permits at the going market price. Such a system would tend to redistribute income away from industries and high-income families who are heavy consumers of energy to low-income families who tend to consume less energy. Because of the potential to sell surplus permits, the public resistance to a permit system would be less than to a carbon tax. The rising price of permits over time would provide the incentive needed for increased energy conservation and to shift to non-fossil fuel energy sources. As in the case of acid rain control, a marketable permit system for carbon emissions control results in control being achieved at the lowest possible cost (1). p. 23 Either of the above strategies would constitute impetus for increases in efficiency and other conservation measures. Both taxes and tradable permits minimize overall abatement costs by allocating the cutbacks to the countries where marginal costs of emissions reductions are the lowest. A major difference between the two strategies is that, with tradable permits, it is possible to specify the exact cutback in emissions (4). Cline (4) believes the best strategy to be reliance on nationally set carbon or greenhouse gas taxes during an initial phase-in period and then, in a subsequent phase, to set the taxes at an inter- nationally agreed rate while each individual nation would continue to collect them. If such taxes failed to achieve satisfactory progress toward global emis- sion targets, it would then be appropriate to shift to an international system of tradable permits. 5.3 Elimination of Subsidies 5.3.1 International Subsidies For some years, the World Bank (33) has been drawing attention to the fact that electricity is sold in developing countries at, on average, only 40% of the cost of its production. A recent study pointed out: Such subsidies waste capital and energy resources on a very large scale. Subsidizing the price of electricity is both economically and environ- mentally inefficient. Low prices give rise to excessive demands and, by undermining the revenue base, reduce the ability of utilities to provide Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. and maintain supplies. Developing countries use about 20 percent more electricity than they would if consumers paid the true marginal cost of supply. Underpricing electricity also discourages investment in new, cleaner technologies and more energy efficient processes (16). p. 12 Shah and Larsen (1991, as cited in Ref. 4) estimated that nine large developing and Eastern European countries (China, Poland, Mexico, Czecho- slovakia, India, Egypt, Argentina, South Africa, and Venezuela) spend a combined $40 billion annually in subsidization of fossil fuels (with China’s* $15.7 billion the largest). The former Soviet Union spends more than twice this amount—$89.6 billion annually—on fossil fuel subsidies. The removal of these subsidies would eliminate an estimated 157 million tons of carbon annually from the developing group and 233 million tons from the former Soviet Union alone. These cutbacks would represent about 8% of global carbon emissions (or about 6% if deforesta- tion emissions are included). Prices that cover production costs and externalities are likely to encourage efficiency, mitigate harmful environmental effects, and create an awareness conducive to conservation. Subsidized energy prices, on the other hand, are one of the principal barriers to raising energy efficiency in developing countries, where it is only 50–65% of what would be considered best practice in the developed world. Studies indicate that with the present state of technology a saving of 20–25% of energy consumed would be achieved economically in many developing countries with existing capital stock. If investments were made in new, more energy-efficient capital equipment, a saving in the range of 30–60% would be possible (9). 5.3.2 U.S. Subsidies According to Ackerman (30), two studies have attempted to measure federal energy subsidies. The Department of Energy’s Energy Information Administra- tion identifies subsidies worth $5–$13 billion annually, while the Alliance to Save Energy, an energy conservation advocacy group, estimates energy subsidies at $23–$40 billion annually (in 1992 dollars). Ackerman also states that several provisions of the tax code are, effectively, subsidies to the oil and gas industry and that, depending on one’s view of a local tax controversy, the total subsidy to oil and gas production alone might be as much as $255 million, almost 5% of sales in 1990. *China accounts for 11% of global carbon emissions, excluding emissions from deforestation. Seventy percent of China’s energy comes from coal (4). Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. 5.4 Increases in Energy Efficiency Primary energy is defined as the energy recovered directly from the Earth in the form of coal, crude oil, natural gas, collected biomass, hydraulic power, or heat produced in a nuclear reactor from processed uranium. Generally, primary energy is not used directly but is converted into secondary energy (9). The process of energy conversion and transformation results in part of the energy being wasted as heat. Energy efficiency considerations focus on the following factors: The efficiency of original extraction and transportation The primary energy conversion efficiency of central power plants, refiner- ies, coal gasification plants, etc. The secondary energy conversion efficiency into storage facilities, distribu- tion systems and transport networks (e.g., of electricity grids) Efficiency of final energy conversion into useful forms such as light and motion (9) For the world as a whole, the overall efficiency with which fuel energy is currently used is only around 3–3.5% (17). According to Orr (32), a Department of Energy study showed that U.S. energy consumption could be reduced by 50% with present technologies with a net positive economic impact. The United States did indeed reduce the energy intensity of its domestic product by 23% between 1973 and 1985 (18). 5.4.1 The Industrial Sector The industrial sector in the more advanced industrial countries is the most efficient energy user. It is easier to be efficient when operating on a larger scale and when energy is an explicit element of operating costs. Profit margins mandate careful cost analysis, and in industries where energy costs comprise a significant portion of total costs, managers are more alert to opportunities for savings (9). According to the Office of Technology Assessment (1991, as cited in Ref. 2) four sectors—paper, chemicals, petroleum, and primary metals—account for three- fourths of the energy used in manufacturing. More than half the energy consumed by industry in the leading industrial countries is as fuel for process heat, and over one-fifth (gross) is in the form of electricity for furnaces, electrolytic processes, and electric motors. Most process heat is delivered in the form of steam, with an overall efficiency variously estimated to be between 15% and 25%. The biggest users of process heat are the steel, petroleum, chemicals, and paper and pulp industries (9). Potential for improvements does exist. In general, sensors and controls, advanced heat-recovery systems, and friction-reducing technologies can decrease energy consumption (5). Many efficiency measures are specific to each industry. For instance, the World Energy Council (9) offers several options for improving Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. efficiency in the chemical industry, including the use of biotechnology and catalysts (Table 1). In the paper industry, automated process control, greater process speeds, and high-pressure rollers can boost efficiencies significantly (5). According to Carlsmith et al. (1990, as cited in Ref. 4), electric arc furnaces using scrap are much more energy efficient for steel production than are traditional techniques and could increase their share of output from 36% to 60%. According to Cline (4), these authors also estimate that by 2010, direct reduction or smelting of ore for making iron would reduce energy requirements in steelmaking by 42% with a net cost savings. Even greater opportunities exist for improving energy effi- ciency in developing countries: for example, China and India use four times as much energy as Japan does to produce a ton of steel (5). In aluminum production, energy efficiency can be increased by improved design of electrolytic reduction cells, recycling, and direct casting. Other exam- ples of improvements in industrial processes include low-pressure oxidation in industrial solvents, changes in paper-drying techniques (as well as paper recycl- ing), and shifting from the wet to the dry process in cement making (4). Co-generation, the simultaneous production of both electricity and steam or hot water, represents a great opportunity for improving energy efficiency in that the net energy yield from the primary fuel is increased from 30–35% to 80–90%. In 1900, half the United States’ electricity was generated at plants that also provided industrial steam or district heating. However, as power plants became larger, dirtier, and less acceptable as neighbors, they were forced to move away from their customers. Waste heat from the turbine generators became an unwanted pollutant to be disposed of in the environment. In addition, long transmission lines, which are unsightly and lose up to 20% of the electricity they carry, became necessary. By the 1970s, co-generation had fallen to less than 5% of our power TABLE 1 Options for Improving Efficiency in Chemical Industry Options Benefits Biotechnology Speed reaction times Reduce necessary temperatures and pressures Catalysts Improve yields and reaction times Reduce necessary temperatures and pressures Separation and concentration Improve product purity Waste heat management Reduce necessary temperatures and pressures Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. supply, but interest in this technology is being renewed, and the capacity for co-generation has more than doubled since the 1980s. 5.4.2 Buildings In developed countries, buildings are the largest or second-largest consumers of energy. In the United States, buildings account for about 75% of all electricity consumption (19) and about 35% of total primary energy consumption (3); most of this is for heating and cooling. Electricity generation alone produces more than 25% of energy-related carbon dioxide emissions (20). Building improvements could therefore have a major impact on overall energy consumption and carbon emissions. In a “typical” North American house, the average efficiency of insulation is about 12% compared with the ideal. As a result, the overall energy efficiency of air cooling systems has been estimated to be barely 5%, and the overall energy efficiency for space heating is less than 1%. These figures do not take into account avoidable losses through heating or cooling unoccupied rooms (9). Building design is one of the simplest yet most effective ways to take advantage of solar energy. Buildings can incorporate either passive or active solar technologies. Passive solar heating and cooling function with few or no mechan- ical devices; primarily they involve designing the form of landscape and building in relation to each other and to sun, earth, and air movement (19). In general, passive technologies use a building’s structure to capture sunlight and store heat, reducing the requirements for conventional heating and lighting. Heating can be cut substantially by the use of one or several technologies in the building’s design (Table 2). When included in a building’s initial design, these methods can save up to 70% of heating costs (21). Orr (32) points out that it is cheaper and less risky by far to weatherize houses than it is to maintain a military presence in the Persian Gulf at a cost of $1 billion or more each month.* Cooling needs also may be reduced by passive means; one strategy is the reduction of internal heat gains. Another passive strategy for reducing cooling needs is by reduction of external heat gains. Several technologies that can be used to reduce internal and external heat gains are listed in Table 2. Also, it is important *Nearly one-quarter of all jet fuel in the world, about 42 million tons per year, is used for military purposes. The Pentagon is considered to be the largest consumer of oil in the United States and perhaps in the world. One B-52 bomber consumes about 228 liters of fuel per minute; one F-15 jet, at peak thrust, consumes 908 liters of fuel per minute. It has been estimated that the energy the Pentagon uses up annually would be sufficient to run the entire U.S. urban mass transit system for almost 14 years. Further, it has been estimated that total military-related carbon emissions could be as high as 10% of emissions worldwide, and that between 10% and 30% of all global environmental destruction can be attributed to military-related activities (28). Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. to trade in old, wasteful for newer, more efficient ones; the payback period may be as little as two to three years (3). One measure proposed in several developed countries is to require all houses to be subject to an energy efficiency survey that would lead to an energy efficiency rating which would have to be disclosed to prospective buyers when the house is sold (9). 5.4.3 Lighting About 40–50% of the energy consumed in a typical house is used for heating and cooling, with an additional 5–10% used for lighting. Lighting is the least efficient common use of energy: about 95% of the energy used in an average lighting system dissipates as heat (19). Incandescent bulbs have an efficiency of about 4% in converting electricity to visible radiant energy. In contrast, the efficiencies of fluorescent lights is typically around 20%, and can be as high as 35% (9). According to Lovins and Lovins (1991, as cited in Ref. 4), a 15-W compact fluorescent bulb emits the same amount of light as a 75-W incandescent bulb and lasts 13 times as long. Further, over its lifetime, it can save enough coal-fired TABLE 2 Technologies for Increasing a Building’s Energy Efficiency Area for improving energy efficiency Technology Heating Heat-circulation systems using natural convective forces Heat pumps Solar-thermal collectors Insulated windows and shutters Special window glazings Heat-storing masses built into structure Building orientation Draft proofing Superinsulation of structure Cooling Fluorescent lighting over incandescent Lower-wattage bulbs Landscaping that provides maximum shade Window shades Reflective or tinted window coatings Insulated windows Light-colored roofs Ventilation by natural convection Ground absorption of heat Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. electricity to reduce carbon emissions by 1 ton with a net savings. The National Academy of Science (1991, as cited in Ref. 4) contends that the replacement of an average of just 2.5 heavily used interior incandescent bulbs and one exterior bulb by compact fluorescent lights would reduce average household lighting energy requirements by 50%. Why, then, do we continue to use incandescents? Lack of awareness Easy commercial availability or promotion High first cost High replacement cost in the event of breakage Cost and inconvenience of retrofitting new lighting systems to existing domestic buildings, where rewiring and new sockets, holders, and appli- ances may be needed (9) 5.4.4 Government’s Role MacNeill (31) contends that, in order to make steady gains in energy efficiency, governments must institute politically difficult changes in at least three areas: 1. Countries must consider “conservation pricing,” i.e., taxing energy during periods of low real prices to encourage increases in efficiency. 2. Stricter regulations should demand steady improvement in the effi- ciency of appliances and technologies, and in building design, auto- mobiles, and transportation systems. [In the United States, efficiency standards for appliances were adopted in 1986. For refrigerators, the biggest users of electricity in most households, the energy efficiency of new models almost tripled from 1973 to 1993 (22).] 3. Institutional innovation will be necessary to break utility-supply monopolies and to reorganize the energy sector so that energy services can be sold on a competitive, least-cost basis. In addition, governments should excise policies that retard the development of new and renewable energy resources, particularly those that serve as substitutes for fuelwood. 5.4.5 Caution As a final word on the issue of efficiency, it is worthwhile to quote Cline (4): In reaching the overall conclusion that some 20 percent to 25 percent of carbon emissions in the United States might be eliminated at zero cost by a move to “best practices,” it is important that there not be a misguided inference that dealing with the greenhouse problem will be cheap over the longer term. . . . Serious action to curb global warming would involve emissions restraints over a period of two to three centu- Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. ries. . . . Whether the first step is low-cost (or even no-cost) is significant but of limited help in gauging the eventual costs. The central point is that a one-time gain from elimination of inefficiencies would shift the entire curve of baseline emissions down- ward but still leave future emissions far above present levels. Consider the period through the year 2100 . . . a central baseline estimate calls for approximately 20 GtC of global carbon emissions by that year . . . an aggressive program to limit global warming would mean restricting emissions to approximately 4 GtC annually. Suppose the engineering approach is correct that, 20 percent of emissions can be eliminated for free. Such gains would still leave emissions at 16 GtC in the year 2100, far above the 4-GtC ceiling needed to substantially curb the greenhouse effect. The remaining cutbacks would have to be achieved through more costly industrial reductions in energy availability beyond those achiev- able through costless efficiency gains. In short, the “best practices” school provides a basis for expecting that addressing the global warming problem may be less costly than otherwise might be thought, but it by no means warrants the conclusion that action will be costless over the longer term (4). 5.5 Energy Conservation in Transportation Transport activities account for about 30% of the energy used by final consumers, and about 20% of the gross energy produced (9). About 98% of the total comes from petroleum products refined into liquid fuels, and the remaining 2% is provided by natural gas and electricity (3). Movement of people takes about 70% of the total, and movement of freight about 30%. Within this sector, road transport accounts for the largest proportion, over 80% in industrialized countries, with air transport next, at 13% (9). According to the United Nations Fund for Population Activities (29), the world car fleet increased by seven times between 1950 and 1980 while human population only doubled during that period. Fifteen percent of the world’s oil is consumed by automobiles and light trucks in the United States alone (Office of Technology Assessment, 1991, as cited in Ref. 4). About 75% of all freight in the United States is carried by trains, barges, ships, and pipelines, but because they are very efficient, they use only 12% of all transportation fuel (3). The rapid increase in road transport in recent years is a major contributor to the rise in oil demand. Further, motor vehicles are believed to be responsible for 14% of all CO 2 derived from fossil fuel combustion (9), along with their contribution to acid rain and other forms of air pollution such as O 3 . The Reagan administration relaxed automobile efficiency standards that had already been met by Chrysler. If the regulations had been left in place, the amount Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. of gasoline saved in a decade or so would have been equivalent to the entire amount of oil estimated to underlie the Arctic National Wildlife Refuge (23). Gasoline prices in Europe and Japan are double or triple the U.S. price because governments there impose levies that force consumers to consider and internalize the full costs of their behavior (5). The gradual imposition of a significantly higher gasoline tax, until the cost of gasoline in the United States is comparable to that in Europe, would create a powerful incentive for people to drive smaller, more fuel-efficient cars and use energy-efficient alternative forms of transportation. Highways and bridges would last longer, and emissions would be reduced, attenuating global warming and acid rain. This would, of course, necessitate improvement of public transportation to accommodate people who could no longer afford to drive to work; some of the gas-tax funds could be set aside for this. In the United States, mass transport accounts for only 6% of all passenger travel; in Germany the figure is over 15% and in Japan it is 47% (9). Another possibility for internalization of the many hidden costs of driving would be the implementation of an insurance program based on the average number of miles a driver travels. This would link a portion of drivers’ insurance programs to the number of miles they drive and collect payments at the gas pump (12). Ledbetter and Ross (11) provide the details of such an arrangement: The price of gasoline at the pump could include a charge for basic, driving-related automobile insurance that would be organized by state govern- ments and auctioned in blocks to private insurance companies. All registered drivers in the state could automatically belong. Supplementary insurance above that provided by the base insurance purchased at the pump could be indepen- dently arranged, as we presently do for all our insurance. For example, owners of expensive cars, or people who desire higher levels of liability coverage, could purchase supplemental insurance. Drivers with especially bad driving records could be required to purchase supplemental liability insurance. Below are some of the advantages of such an arrangement. Insurance costs become much more closely tied to the amount of driving alone. The more miles a person drives, the more insurance he or she pays. Since accident exposure is closely correlated with miles driven, the proposed system would be more fair than the present system, in which people who drive substantially less than the average miles per year are given only small discounts, and people who drive substantially more than the average don’t pay any additional premium. If insurance were part of the cost of gasoline, a person could not drive without paying for insurance. Uninsured motorists would be brought into the system, substantially lowering the cost of driving for insured motor- ists: in California for example, uninsured motorists increase premiums for insured motorists by about $150 per year. Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. The apparent cost of gasoline at the pump would rise substantially, roughly 50 cents to a dollar per gallon. Such a price rise would encourage the purchase of more fuel-efficient vehicles and help slow the growth in vehicle miles of travel. For consumers, the increase in the price of fuel would be offset by a decrease in the annual insurance premium motorists would pay directly to insurance companies, resulting in no net increase in driving costs. Unlike a gasoline tax, this system would not be regressive: many low- income persons drive substantially less miles per year than their higher- income counterparts. They would, therefore, see a substantial drop in the money they pay for auto insurance (11). 5.5.1 Efficiency Issues in Transportation The efficiency of a motor vehicle is a function of several factors (Table 3). Typically, about 80% of the fuel used in a representative vehicle traveling over a mix of urban, rural, and highway routes is unproductive energy spent in overcom- ing internal friction in auxiliary items and in thermodynamic losses in the engine (9). Improvements in vehicle design and alternative fuels can have a major impact in improving efficiency and reducing emissions. However, much of the forward momentum achieved in the decade prior to 1985 has slowed in response to downward oil price movements and apparent consumer preferences (9). The inherent efficiency of the internal combustion engine began to ap- proach its limits in the 1960s. Engines built since then range from 34% efficiency for spark-ignition automobile-type engines under optimum load/speed conditions to about 42% for large marine-type and direct-injection diesels. The difference is attributable to the higher compression ratios, lower throttle losses and improved direction injection achievable in large diesels. In practice, however, optimum load/speed conditions are never achieved. The energy efficiency of a vehicle operating in traffic, with variable speeds and TABLE 3 Factors Affecting a Motor Vehicle’s Fuel Efficiency Factor Components Design Weight Efficiency Frictional losses Aerodynamics Use Effectiveness of use in transporting materials and people Typical operational cycle Length of journey Traffic conditions Copyright 2002 by Marcel Dekker, Inc. All Rights Reserved. [...]... beautiful stretches of American rivers, flooded agricultural lands, forests, and areas of historical and geological value, and resulted in the dislocation of communities and loss of wildlife (6) Dam failure can cause catastrophic floods and thousands of deaths Sedimentation often fills reservoirs rapidly and reduces the usefulness of the dam for either irrigation or hydropower (3) 6.4 Synthetic Fuels... best sites are in the Great Plains and include North and South Dakota, Kansas, and Montana (6) Seacoasts also offer great potential for siting wind farms Opponents have complained of visual and noise pollution While most wind farms are too far from residential areas to be heard or seen, they do interrupt the view in remote places and destroy the sense of isolation and natural beauty They can also pose... Chelsea, MI: Lewis, 1991 14 D L Johnson and L A Lewis, Land Degradation: Creation and Destruction Cambridge, MA, and Oxford, U.K Blackwell, 1995 15 Committee on Interior and Insular Affairs to Accompany HR 11500, Surface Mining Copyright 2002 by Marcel Dekker, Inc All Rights Reserved 16 17 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 37 Control and Reclamation Act of 1974, HR93-1072 Washington,... contains little sulfur and burns at lower temperatures than coal, resulting in the production of fewer nitrogen oxides However, unless trees cut for fuel are replaced with seedlings, wood burning results in a net increase in atmospheric CO2 Inefficient and incomplete burning of wood in stoves and fireplaces produces smoke laden with fine ash and soot and hazardous amounts of carbon monoxide and hydrocarbons... gaseous form, and is therefore economical to transport by tanker ship However, if a very large LNG tanker had an accident and blew up, it would release as much energy as several Hiroshima-sized atomic bombs (3) 5.7 Increased Exploitation of Passive Technologies Because most paved surfaces, and the surfaces of most buildings, tend to retain and release more heat than is true of vegetated areas, and because... energy that may be required to decommission nuclear plants and guard their waste products in secure storage for thousands of years (3) The raw materials required for nuclear fuels result in the same disturbances of the landscape as other mined minerals Denmark has never permitted atomic power plants to be constructed within its boundaries, and Sweden has a policy of decommissioning all its existing... fuelwood (including charcoal) for more than 75% of their nonmuscle energy About 40% of the world’s total population depend on firewood and charcoal as their primary energy source In some African countries, such as Rwanda and Sudan, firewood demand is already 10 times the sustainable yield of remaining forests (3) These figures illustrate the enormity of the potential for environmentally benign energy... generate electricity directly from sunlight without going through the process of thermal–electric conversion These cells are made of silicon or other semiconductor materials; they have no moving parts and therefore are quiet and reliable Photovoltaic cells require no maintenance, have the potential for long life, produce no pollution, and consume no water in generating electricity They can convert 20%... care must be taken with size of concentrators and with the films and silicon used in photovoltaics (9) It must be remembered that net yields and overall conversion efficiencies are not the only considerations when different energy sources are compared The yield/cost ratio and conversion-cycle efficiency is much higher for coal burning, for example, than for photovoltaic electrical production, making... Organization for Economic Co-operation and Development, 1998 3 W P Cunningham and B W Saigo, Environmental Science Dubuque, IA: William C Brown, 1997, 1992 4 W R Cline, The Economics of Global Warming Washington, DC: Institute for International Economics, 1992 5 J H Gibbons, P D Blair, and H L Gwin, Strategies for Energy Use Sci Am., vol 261, no 3, pp 136–143, 1989 6 J J MacKenzie, J.J Energy and Environment . is as fuel for process heat, and over one-fifth (gross) is in the form of electricity for furnaces, electrolytic processes, and electric motors. Most process heat is delivered in the form of steam,. agricultural lands, forests, and areas of historical and geological value, and resulted in the dislocation of communities and loss of wildlife (6). Dam failure can cause catastrophic floods and thousands. between 15% and 25%. The biggest users of process heat are the steel, petroleum, chemicals, and paper and pulp industries (9). Potential for improvements does exist. In general, sensors and controls, advanced