Designing a Climate-Friendly Energy Policy: Options for the Near Term

Pew Center on Global Climate Change

July 2002

By Doug Smith, Robert Nordhaus, Tom Roberts, et. al.

Energy use and climate change are inextricably linked. In the current national energy policy debate, choices made today will directly impact U.S. greenhouse gas (GHG) emissions far into the future. In addition, near-term energy policy decisions will affect the costs of implementing any future climate policy. This report contributes to the debate by examining a number of  “climate-friendly” energy policy options for the near term—that is, policies that would advance U.S. energy policy goals during the next few decades while at the same time contributing to efforts to curb global warming.

Executive Summary

Energy policy and climate policy are closely linked because the majority of U.S. greenhouse gas (GHG) emissions are in the form of carbon dioxide (CO2) emissions resulting from the combustion of fossil fuels. Energy policies can reduce CO2 emissions by, for example, increasing energy efficiency, reducing reliance on fossil fuels, and shifting from high-carbon to lower-carbon fuels. Conversely, energy policies that miss opportunities to make such changes will leave unchecked the trend of increasing CO2 emissions. Consequently, energy policy decisions made today can help reduce GHG emissions in the near term and can significantly affect how costly it would be to implement any future climate policy.

The federal government is in the throes of one of its periodic comprehensive reviews of U.S. energy policy. It is likely that significant federal energy policy questions will be addressed in the near term, before the development of any climate change regulatory program. Yet, there is also the distinct possibility that the United States will eventually adopt a mandatory GHG reduction program. This report considers energy policies that can be adopted in the context of the energy policy debate, short of adopting a GHG program now, to best position the nation to reduce GHG emissions and to implement future climate change policies. These are the options that make up a “climate-friendly energy policy.”

In reviewing policy options, we have identified four key objectives that drive energy policy:

  1. Secure, plentiful and diverse primary energy supply,
  2. Robust, reliable infrastructure for energy conversion and delivery,
  3. Affordable and stable energy prices, and
  4. Environmentally sustainable energy production and use.

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