On November 14, 2007, Governor Granholm signed Executive Order 2007-42, creating the Michigan Climate Action Council (MCAC) with the tasks of generating a Greenhouse Gas (GHG) emissions inventory and forecast, compiling a comprehensive Climate Action Plan with recommended GHG reduction goals and potential actions to mitigate climate change in various sectors of the economy (MCAC, 2009). The MCAC began deliberations in December of 2007, with the first of eight meetings leading to the Michigan Climate Action Council, Climate Action Plan (CAP), completed in March of 2009. Members of the public were encouraged to observe and provide input at all MCAC meetings.

The MCAC formed six Technical Work Groups (TWGs) – Energy Supply (ES); Market-Based Policies (MBP); Residential, Commercial and Industrial (RCI); Transportation and Land Use (TLU); Agriculture Forestry, and Waste Management (AFW); and Cross-Cutting Issues (CCI) – to serve as advisors to the MCAC. The TWGs assisted the MCAC by generating initial Michigan-specific policy options to be added to the catalog of existing state actions; developing priority policy options for analysis; drafting proposals on the design characteristics and quantification of the proposed policy options; and reviewing specifications for analysis of draft policy options (including best available data sources, methods and assumptions). The TWGs also provided evaluation of other key elements of policy option proposals, including related policies and programs, key uncertainties, co-benefits and costs, feasibility issues, and potential barriers to consensus. Process facilitation and technical assistance was provided by the Center for Climate Strategies (CCS).

The resulting Michigan Climate Action Plan (CAP) establishes a set of policy options for reducing Michigan GHG emissions to 80 percent of 2005 levels by 2050. Policy options cover all sectors of the Michigan economy and have sweeping implications for the long-term performance of the Michigan economy. From the initial 330 policy options reviewed, the MCAC selected 54 least costly policy options for reducing GHG emissions and addressing related energy and commerce issues in Michigan. Moreover, several policy options are expected to result in net cost savings in that savings generated from implementation are expected to outweigh initial costs. For example, many electricity demand-side management practices translate into less electricity needed to produce a given outcome, such as running an assembly line or cooling a home. When this is accomplished at no cost at all or at a net cost-savings on an electricity bill, this is referred to as an energy efficiency improvement. In other cases, as when new equipment must be purchased, the additional expense may exceed this cost savings in reducing GHG emissions.

Of the 54 policy options approved by the MCAC for action in Michigan, 33 were analyzed quantitatively to calculate both emission reductions and net direct costs. Based on this analysis, the 33 quantified policies have the cumulative effect of reducing annual GHG emissions by approximately 41 million metric tons of carbon dioxide equivalent (MMtCO2e) in 2015 and by 117 MMtCO2e in 2025. The MCAC approved policy options were estimated to generate a net cumulative savings of about $10 billion between 2009 and 2025. Based on MCAC estimates, the weighted-average cost-effectiveness of these policies was estimated to be a savings of approximately $10.20 per ton of carbon dioxide equivalent reduced.

Contents

Executive Summary
I. Introduction
II. REMI Model Analysis
III. Input Data
A. The Michigan Climate Action Council Climate Action Plan
B. REMI PI+ Model Input Development
C. CAP Modeling Assumptions
IV. REMI Simulation Set-Up
V. Simulation Results
A. Basic Results
B. Sensitivity Tests

B.1. Outcome Sensitivity to Changes in Discount Rate
B.2. No Capital Investment Displacement
B.3. Changes to Baseline Projections

VI. Conclusions
References
Appendix A: Description of the REMI Policy Insight Model
Appendix B: REMI Model Baseline Projections
Appendix C: Model Inputs
Appendix D: Detailed Simulation Results
Appendix E: Updates of Policy Options

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PDF Ebook The Macroeconomic Impact of the Michigan Climate Action Council Climate Action Plan on the State’s Economy