Energy Innovation, a San Francisco–based think tank, has created what may be the coolest tool for energy nerds I've ever seen. It's called the Energy Policy Simulator, and it lets anyone see the impacts of their energy policy choices on a whole range of outputs, including US greenhouse gas emissions.

The modeling is the result of two years of work and has been peer-reviewed by "scientists from the Massachusetts Institute of Technology, Stanford, and Berkeley, U.S. national laboratories, and two Chinese research groups." It shows not only the results of individual policies, but also how various policies interact.

The version accessible on the website is actually somewhat stripped down, as the creators didn't want it to be overwhelming to newbies. If you want the full-meal deal, with the ability to tweak all the options and parameters, you can download a complete version, along with all the data and methodology. (The web version is fun and easy to use; to deal with the full version, you need some serious nerd-fu.)

Choose-your-own energy policy

The default interface is simple: It shows US greenhouse gas emissions (expressed as CO2 equivalent) under a "business as usual" scenario, along with the GHG target Obama agreed to in his bilateral deal with China (that's the green dot).

You can fiddle around, creating and saving your own scenarios from the policy options on the left. Or you can choose from a selection of preset policy portfolios, including:

A package of six policies that meets the goals set out in Obama's Clean Power Plan

A package of 15 policies selected by Energy Innovation to meet Obama's pledge to the international community

A package that consists of all 50 available policies, all cranked up to maximum strength, called the "CO2e minimizing" option (I'm calling it the gonzo scenario)

Here's how they affect US greenhouse gas emissions:

One thing that's immediately clear: The Clean Power Plan is pretty wimpy!

No single policy can do the job

The simulator makes clear that there's no policy "silver bullet," as the cliché goes. It is impossible to hit even Obama's modest target without a combination of policies acting in concert.

For instance, here's what things look like with only a carbon tax, cranked up as high as the model allows, to $100 per ton ("phased in linearly from 2016-2030"):

As you can see, a fairly fat carbon tax phased in over the next 15 years only gets us about halfway to Obama's target.

But many policies working together can have a far larger impact. Here's how the Energy Innovation portfolio adds up:

This illustrates what I've said a million times: A price on carbon is important, but unless you want to crank it up to completely politically unrealistic levels ($200?), it can't do the job alone. When you join it with a suite of complementary policies, you get much bigger emission reductions.

What's more, contrary to conventional wisdom, complementary policies do not raise the cost of the transition. Especially when it comes to demand-side and energy efficiency policies, they lower costs.

The chart below is a good way to break down the effects of EI's recommended policies. A policy's height on this chart shows its effects on costs. Its width shows how much it reduces emissions. As you can see, the revenue-neutral carbon tax (at the far right) achieves almost half the emission reductions, but at a positive cost; the other half of the emission reductions come from the complementary policies on the left, at negative cost:

Including lots of energy efficiency brings down the costs of any scenario

Demand-side and efficiency policies turn out to be crucial to holding down the costs of the transition.

As in the illustration, consider the cumulative costs and savings of the Clean Power Plan, relative to business as usual:

(Keep in mind, this does not include health or climate benefits — only capital and operating expenditures for private businesses. More on how costs are measured here.)

As you can see, costs surge over the next decade and then become net savings relative to business as usual around 2025.

Now let's look at the same chart for the EI policy package:

As you can see, the period in which costs rise is much shorter and the accumulation of net savings much steeper and faster than in the less ambitious scenario. That's mainly due to savings on fuel costs that come with efficiency, demand management, and (in the later years) switching to renewable energy.

The political dilemma: trading short-term energy costs for long-term benefits

The simulator can also help visualize the political challenge facing climate hawks. Here are two graphs showing the effects of the three scenarios — on the top, their effects on "total outlays"; on the bottom, their "monetized public health and climate benefits."

"Total outlays" is not a perfect representation of cost (because there isn't one — turns out there are multiple legitimate ways to measure costs). It amounts to capital and operational expenditures plus any money paid out in public subsidies — basically, all money spent, above and beyond the business-as-usual level, as a result of a set of policies. For various technical reasons (email me if you're interested), it's probably an exaggerated picture of the costs of the policies in question.

But that's fine, because the main thing we're interested in here is the shape of the curves, not their exact levels. Almost any way you stack up the policies, you get roughly the same shape: Costs rise in the short term, but then head back down. The more ambitious the policies, the higher the spike and the longer it takes to peak and decline, but the shape doesn't change.

Now look at the public health and benefits on the bottom, and notice two things.

First, the numbers on the y-axis are bigger, which is to say, the benefits dwarf the costs. Even for the most aggressive scenario, extra costs peak around 2026 at $250 billion a year (in 2012 dollars). But by 2026 that same scenario is racking up close to $800 billion in benefits a year.

Second, while costs rise and then begin falling, benefits just keep rising and rising — a trillion dollars a year in benefits to the gonzo policy scenario by 2030.

All this suggests two conclusions about the politics of a clean energy transition. First, it is unquestionably worth doing. For almost any policy scenario you can cook up, the benefits rapidly outweigh the costs. What's more, this is true even for the most ambitious policy scenario the model is capable of producing. It is virtually impossible, certainly politically impossible, for us to do "too much," to move so fast or at such scale that costs start outweighing benefits.

That's pretty clarifying, in terms of political strategy: Do anything that can be done, and never stop pushing. Simple!

Second, some industries and some customers must pay higher costs in the short term so that society can benefit in the longer term. Those higher costs are temporary, but real. So there's a kind of political crevice to squeeze through, when costs are highly visible and benefits are just beginning to accumulate. If we can get through the crevice, things open up — costs come down, benefits get bigger and more obvious. By then, the clean energy transition will have unstoppable momentum.

But getting through that narrow crevice is a trick.

A little is easy, enough is hard

The gonzo portfolio, with its 50 policies all cranked to maximum strength, looks like this:

That drastic drop in emissions is what it would look like if the US did everything that is even remotely within the realm of political possibility (short of extreme measures like personal CO2 quotas, nationalizing the energy industry, or entering a voluntary recession). It would put us roughly on track to zero out emissions by 2050.

That is pretty much what we need to do if we want a reasonable hope of avoiding 2 degrees or more of global warming. Given how much controversy the relatively mild Clean Power Plan is causing — while not even achieving the target Obama promised the international community — sufficient ambition looks distant indeed.

Here's a video introduction to the simulator: