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2013 | 2012 | 2011

December 2012

December 10, 2012 

The Prospect of Geoengineering

While the head of the United Nations Climate Change Secretariat recently dismissed the idea of using geoengineering measures to help cool the planet, the Intergovernmental Panel on Climate Change is examining the issue for the first time to help reduce carbon emissions.

Is the world ready to test new geoengineering technologies? Join RFF this Thursday, December 13, for the final Resources 2020 lecture in 2012, “Geoengineering: Time for Some Gentle Experimentation," with 2005 Nobel Laureate in Economic Sciences Thomas C. Schelling. Register to attend in person or watch the live webcast and tweet questions using #AskRFF.

Regulating CO2 under the Clean Air Act

According to a new report from the Natural Resources Defense Council, the US Environmental Protection Agency “could cut US emissions some 10 percent” by setting flexible state-level targets for all existing power plants. RFF Darius Gaskins Senior Fellow Dallas Burtraw says that “the plan makes two substantial contributions” by illustrating the “value of a flexible, incentive-based approach to implementing the regulations” and providing a wide range of compliance options.

However, RFF Resident Scholar Nathan Richardson notes that the plan’s “flexibility carries legal risk.” In a new blog post, he examines the question: “Is a source that does nothing to cut its own emissions, but instead buys efficiency and renewable credits, really meeting a performance standard?”

Reporting from Doha

As media outlets reported last week on the lack of progress at the UN Conference of the Parties 18 (COP 18), RFF’s Kristin Hayes observed that a “sticking point in the negotiations” was the “ambition deficit”— the “significant gap between the Intergovernmental Panel on Climate Change’s recommended level of emissions reductions . . . and the level of emissions reductions currently committed to by countries worldwide.”

RFF Center Fellow Daniel Morris also noted that “getting to [a global emissions] treaty is never smooth sailing,” despite the “relatively simple” expectations of this year’s conference.

December 3, 2012 
Market-based Success in California?
The California Air Resources Board was “delighted” with the results of the state’s first carbon auction. Others also touted this market-based program as a success, and potentially a “model for the nation.”
While such market-based environmental policy approaches are not new, some programs have had more success than others. Next week, at RFF’s final First Wednesday Seminar of 2012, panelists will review lessons learned from successful and unsuccessful applications of market-based policy, and discuss its desirability and feasibility for the future. Register today for “Whither Markets for Environmental Regulation of Air, Water, and Land?” on December 5 at RFF.
Mangroves in Qatar
As the 2012 UN Climate Change Conference gets underway in Doha, Qatar, the possible agreements that may (or may not) be reached are not the only source of debate. Since Doha “has the largest carbon footprint per person in the world,” some are questioning if this is the right location to host such a conference.
On the other hand, Qatar’s mangrove forests present a unique environmental opportunity. According to a new RFF report, protecting mangroves, salt marshes, and sea grass meadows—which store significant amounts of carbon—“may prevent the stored 42 billion tons of CO2 emissions from entering the air.” The authors also find that including “blue carbon” habitats in deforestation prevention programs may be the first step.
Flaring from Oil and Gas Development
Burning off the excess gases associated with drilling oil and natural gas wells—called “flaring”—is one option for managing the gas that is released as a result of these processes. Some companies have said that it’s a better option than venting the gas into the atmosphere.
Flaring and venting are both monitored by state regulators, but significant differences in regulatory requirements exist throughout the country. RFF’s Review of Shale Gas Regulations by State shows that some states—like North Dakota, South Dakota, and Nebraska—require flaring over venting, while others restrict the amount of gas that can be flared and the well development phases during which gas can be flared. Find RFF’s maps of flaring and venting regulations under the “Well Drilling and Production” section of the Review.

November 2012

November 19, 2012 
US Oil Production
Due to increased development of oil shale, the United States will become the world’s largest oil producer by 2020, according the latest World Energy Outlook from the International Energy Agency. It also claims that the United States may become essentially energy independent as a result of increased production and energy efficiency. In the first installment of a new series on Common Resources, RFF Senior Fellows Joel Darmstadter and Roger Sedjo discuss the trends in consumption and production that are making energy independence possible and the economic and environmental implications that independence might have in the United States.  
Future of Fuel
The World Energy Outlook underscores the momentum of the country’s current energy boom, fueled by major advances in hydraulic fracturing technology. How will increased production and uncertainty surrounding EPA regulations for numerous air pollutants combine to affect energy usage and generation over the next decade? On November 28th, experts will explore this question at “The Future of Fuel: Toward the Next Decade of US Energy Policy,” part of RFF’s Resources 2020 60th anniversary event series. This seminar will highlight the future of five key fuels—oil, coal, natural gas, renewables, and nuclear—over the next decade, while also considering the future of energy efficiency. Register now.
California Emissions Auction
Last week California held the first auction for CO2 emissions permits in its cap-and-trade market. It is the final stop toward full implementation of California’s Global Warming Solutions Act (AB 32). RFF Darius Gaskins Senior Fellow Dallas Burtraw advised the state on implementing its cap-and-trade market. In a recent op-ed, he writes that it will be the “best-designed program in the world to date” due to its ability to manage costs, the central role that an auction plays, and the careful design of the value of the permits.

November 12, 2012 
Tax Reform and the Fiscal Cliff
The nation may need new revenue sources to address its fiscal problems, and some are speculating that President Obama may consider a carbon tax as part of the solution. This weekend the Washington Post Editorial Board called a carbon tax “the best plan lawmakers can take off the shelf to fight global warming,” and RFF University Fellow William Pizer noted that “If something is discouraged, it might as well be something bad like pollution instead of employment and savings.”
RFF President Phil Sharp joined a National Journal panel last week to discuss what to expect during the lame duck session of Congress. He noted that a carbon tax may be a potential new stream of income that could “kill two birds with one stone.” Video is available here.
RFF experts answer many of the pressing questions about a carbon tax and weigh options for designing the tax in these FAQs.  
Voters Care about Climate
In the president’s acceptance speech, he briefly mentioned the threat of a warming planet, perhaps in reference to the discussions about Hurricane Sandy during the days prior to the election. According to surveys and research by RFF University Fellow Jon Krosnick, US voters generally favor environmental policies and talking about those policies can help candidates. Video and slides from his presentation at RFF are available here.

November 5, 2012 
Energy, Climate, and the Presidential Race
Election Day 2012 is finally upon us, and energy issues have played a notable role in both presidential campaigns. There are significant differences between the energy policies proposed by President Obama and Governor Romney, which were highlighted earlier this month in a debate at MIT. RFF Nonresident Fellow Joe Aldy represented the Obama administration’s position and Oren Cass spoke for the Romney campaign.
However, both candidates have been relatively silent on issues related to climate change, as noted by RFF’s Nathan Richardson. This did not stop NYC Mayor Bloomberg from endorsing Obama, citing the president’s commitment to addressing climate issues. Aldy and Cass also weighed in on the aims of both candidates for promoting clean energy and reducing carbon emissions.
Costs of Hurricane Sandy
The impact from Hurricane Sandy has focused the nation’s attention on the costs of extreme weather events. RFF Fellow Carolyn Kousky writes about the real damages that get excluded from such cost estimates. RFF Vice President for Research Molly Macauley discusses the value of investing in information systemssuch as the nation’s weather satellite networkto better track and predict extreme events. And, Sandy is responsible for the second most power outages caused by a storm in US history; RFF Senior Fellow Tim Brennan notes that cities can improve their electricity reliability by paying for it.
The storm also injected climate change into presidential campaign conversations—politicians have recently said that the country is not fully prepared to adapt to new climatic conditions. A group of RFF researchers teamed up with numerous outside experts to outline concrete policy recommendations that the federal government can take to help facilitate climate adaptation at the local and national levels.

October 2012

October 29, 2012 
Expert Judgment and Earthquakes
Last week, six Italian scientists and a former public official were found guilty of manslaughter for not accurately warning the citizens of L’Aquila before an earthquake ravaged the city and killed 309 people. RFF Chauncey Starr Senior Fellow Roger Cooke noted that the case has piqued interest in Structured Expert Judgment, a process he developed to quantify uncertainty and improve decisionmaking in complex risk scenarios like earthquakes.
Reducing CO2 Emissions in the United States
The United States could come close to meeting the emissions reductions commitments it made in Copenhagen, according to new research from RFF Darius Gaskins Senior Fellow Dallas Burtraw and Matt Woerman. The study contends that improved fuel standards, EPA regulations under the Clean Air Act, cheap natural gas, and better energy efficiency may achieve greater emissions reductions than what was proposed under Waxman–Markey. These results sparked a thoughtful conversation with the Council on Foreign Relations’ Michael Levi, still underway on RFF’s blog, Common Resources.
October 22, 2012 
Energy in the Presidential Race
Energy policy came up repeatedly in the opening moments of the second presidential debate as the candidates covered a range of issues, from energy independence to the loss of coal jobs to the price of gasoline. RFF experts have been keeping an eye on the conversation, providing context for the arguments presented by both parties: Director of RFF’s Center for Energy Economics and Policy Alan Krupnick laments misinformation about gas prices, RFF Senior Fellow Joel Darmstadter revisits the perpetual call for energy independence, and RFF Research Director Karen Palmer discusses how market forces are driving the decline of coal power generation.
Carbon Offsets in California
The New York Times calls the use of carbon offsets in California’s impending cap-and-trade system a “grand experiment” to mitigate greenhouse gas emissions. It highlights the role of forest offsets, which can help control the costs associated with cap and trade. In an article for Resources magazine, Director of RFF’s Center for Climate and Electricity Policy Ray Kopp describes using forest offsets to reduce impacts on consumers from increasing carbon prices. Furthermore, if California decides to look to international forest offsets for greater cost savings, work I conducted with Nathan Richardson and Anne Riddle suggests it might find a significant supply in Mexico.
October 15, 2012 
Carbon Emissions from Bioenergy
Converting Indonesian rainforests into palm oil plantations for cooking oil and biofuels is generating globally significant CO2 emissions, according to a new study from Yale and Stanford. The study is particularly relevant as EPA considers including palm oil biofuel under the Renewable Fuel Standard.
The debate over whether bioenergy is carbon neutral is one that Roger Sedjo, RFF senior fellow and director of the Forest Economics and Policy Program, knows well. He explains that while bioenergy can lead to emissions increases in the short term, those increases can be offset by full regrowth of forests over the long term.
Natural Gas and Electricity Prices
According to the US Energy Information Administration, 2012 was a record year for natural gas production in the United States. Increased gas supplies to the electricity sector combined with reduced electricity demand will lower retail prices over the next 20 years, according to an analysis by several RFF experts. They also note that these dynamics will have a greater impact on prices than the impending EPA regulations for power plants.
Correction: Last week, I incorrectly said a new report blamed subsistence agriculture for 80 percent of tropical deforestation. The report actually states that both commercial and subsistence agriculture are responsible for deforestation.
October 10, 2012 
Environmental Economics and Institutions
Regulations to reduce air pollution led to reductions in productivity and profits at regulated plants, according to a new NBER working paper. Economic approaches can identify the most cost-effective strategies for achieving the goals of environmental regulations, but they are not often used to do so. Senior Fellow Dallas Burtraw suspects that in order for economic solutions to environmental problems to be designed and applied more effectively, a better appreciation of the complexity of institutions is needed.
Forests and Climate
A recent report sponsored by the governments of Norway and Great Britain contends that subsistence agriculture is responsible for 80 percent of tropical deforestation. According to RFF Visiting Scholar Michael Wolosin, efforts to “mobilize private sector investment in restoring degraded lands to productivity and improving the yields and efficiency of existing agricultural lands” could combat this effect. In a new RFF report, he writes that the United States should reorient its REDD+ program to directly tackle deforestation from agriculture.
Community Resilience
This month, Scientific American describes the links between international aid, economic development, and environmental protection for building resilient communities in developing countries. In an interview for Resources magazine, Mohamed El-Ashry, former CEO and chairman of the Global Environmental Facility and an RFF Board Member, says that such an approach is key to preparing communities to adapt to climate change. He discusses his views, stating, “There’s no question about the linkage between adaptation and development . . . Adaptation requires a long-term effort that starts with building reliance in communities, so it must be within a country’s development framework.” Video and transcripts of the interview are available here.
October 1, 2012 
Forest Health
While the idea of using controlled burns for forest conservation has been spreading globally, the Forest Health Initiative (FHI)—a collaborative public–private effort—is exploring the use of biotechnology for protecting forest health.
On October 3, Roger Sedjo, RFF senior fellow and director of the Forest Economics and Policy Program, will moderate an expert discussion on the FHI, examining questions such as if and when genetic modification should be used to protect forests. Register online to attend the event in person or watch live via webcast and tweet your questions using #AskRFF.
Debates on Shale Gas Regulation
As debates over the regulation of shale gas continue, experts in RFF’s Center for Energy Economics and Policy are continuously improving their Review of Shale Gas Regulations by State to reflect the latest updates. RFF’s Nathan Richardson explains that the most recent version, released on September 24, attempts “to distinguish between those states that regulate an activity via the permit process and those that don’t regulate at all.”
Silent Spring Turns 50: RFF Turns 60
This month marks 50 years since Silent Spring was published. Ten years earlier, a presidential commission recommended the creation of an independent organization to analyze the supply of natural resources in the United States. RFF was created to answer that call and began to lay the groundwork for the field of environmental economics.
This year, RFF is celebrating its 60th anniversary with an exploration of how economic inquiry can address future environmental challenges. Don’t miss the first of three Nobel Laureates to discuss their views on these issues: Joseph Stiglitz will present “Inequality and Environmental Policy” on October 5th. Watch live via webcast and tweet your questions using #AskRFF.

September 2012

September 24, 2012 
Carbon Tax Reality
Washington Post columnist Ezra Klein recently fantasized about a carbon tax being the silver bullet to the congressional stalemate over the looming fiscal cliff. His dream is dashed by Grover Norquist, who says a carbon tax is “a new tax that will grow” and would not be accepted by the Republican Party. However, Director of RFF’s Center for Climate and Electricity Policy Ray Kopp explains that a carbon tax is a self-extinguishing tax, one that is purposefully designed to deplete its tax base over time.
California Offset Supply
A new report asserts that California’s upcoming carbon market could be short of offset supplies from the start—up to 29 percent below maximum demand in 2013 because only a few types of offsets are allowed. Offset supplies could be further limited by a rule that places liability for bad offsets on the buyer. In an RFF Policy Commentary, Harrison Fell and I examine “whether offset buyers or the state are better equipped to evaluate offset quality and deal with potential invalidation at least cost.”
Drilling in the Arctic  
Shell’s deepwater drilling in the Arctic was stymied when spill-containment equipment was damaged during a test. Many companies looking to extract oil from the Arctic are taking a cautious approach, due in part to new regulations resulting from the 2010 Gulf oil spill. Director of RFF’s Center for Energy Economics and Policy Alan Krupnick explored the importance of weighing competing interests related to drilling in the Arctic: the desire to reduce environmental risk while improving energy security. 
September 17, 2012 
New Source Performance Standards
On Thursday, the House Energy and Commerce Subcommittee on Energy and Power is holding a hearing on EPA’s New Source Performance Standards for power plants and the proposed H.R. 6172, a bill that would prohibit EPA from imposing carbon emissions standards on power plants until carbon capture and storage technology is proven feasible. A team of RFF experts recently sent comments to the agency, noting that the proposed standards are an “important step” for limiting greenhouse gas emissions, but that concerns still exist about future regulatory uncertainty.
Impact of Energy Subsidies
While the role of government subsidies for energy production has generated some controversy lately, it has always been a challenge to understand when the benefits of subsidies outweigh the costs. A new report by RFF’s Maura Allaire and Stephen P.A. Brown examines these issues, finding that energy subsidies between 2005 and 2009 resulted in increased CO2 emissions by 53.1 million metric tons in 2005, but were responsible for 38 million tons in emissions reductions by 2009.
Carbon Tax Revenue and Emissions Leakage
Norway’s environment minister recently announced that the country would offset costs to industry for carbon dioxide emissions to help ensure that “strict environmental demands don’t force a migration of emissions and carbon leakage.” The leakage of carbon emissions has also been a concern in the United States as debates continue about a potential US carbon tax. New research by RFF Senior Fellow Carolyn Fischer and Alan Fox suggests that using carbon tax revenue on anti-leakage measures can generate significant cost savings and that tax interactions make border adjustments more attractive than other measures.
September 11, 2012 
Over the past two weeks, RFF experts have posted their analyses of the 2012 environment and energy agendas of the Republican and Democratic platforms on RFF’s blog, Common Resources. Below are highlights of some of the posts.
Alan Krupnick examines both platforms. First, he explores the contradiction of Republicans’ desire for the country to be energy independent, but reliant on free market forces to determine the composition of the nation’s energy supply. Next, he wonders how Democrats can advocate an “all-of-the-above” approach to energy, but then call for 80 percent to come from clean sources by 2035.
Ray Kopp discusses the omission of any substantive mention about climate change from the Republican platform and how it contradicts the stated desire to ensure the welfare of future generations.
Joel Darmstadter discusses three pieces of the Democratic platform on energy policy: energy independence, environmental safeguards, and climate change.
Nathan Richardson applauds Republicans for advocating for some renewable energy, but points out how inconsistencies with other parts of the platform will make the idea a policy orphan.
Tim Brennan challenges the Democratic platform idea that promoting clean energy and energy efficiency as job-creating policies is a win-win proposition without any costs.
Heather Ross notes that a focus in the Republican platform on maximizing the economic potential of natural resources and minimizing environmental safeguards may be ruinous over the long-term.
I take a look at the brief mentions of international environmental and climate negotiations and what the positions may mean for diplomacy in the next administration.
September 4, 2012
Addressing Carbon Leakage
The European Union and Australia recently announced their intentions to link carbon emissions trading systems starting in 2015, with a full link to be established by 2018. Strong links between emissions trading systems may help reduce emissions leakage to other nations, and domestic policies can also help ensure that industries are not disadvantaged by climate regulations. Tomorrow’s RFF First Wednesday Seminar will discuss how border measures can combat greenhouse gas emissions leakage in national emissions-reduction schemes. Register for the event here.
Overturning EPA Regulation
The DC District Court of Appeals overturned the Cross-State Air Pollution Rule, dealing a major setback to EPA’s effort to further reduce non-CO2 pollutants from power plants. This decision adds more uncertainty to the complex set of impending EPA regulations facing the electricity sector. However, new research by RFF experts found that the electricity sector is expected to be able to comply with the rules without major disruptions. RFF also hosted a technical workshop to discuss the possible effects of these impending regulations. Presentations from the event are available here.
New CAFE Standards
Last week, the Obama Administration released its final Corporate Average Fuel Economy (CAFE) standards for cars and light trucks, which require that these new vehicles achieve an average of 54.5 miles per gallon by 2025. But how much will these changes impact the market? Research by RFF Fellow Josh Linn and Thomas Klier suggests that in the medium run (four to five years), auto manufacturers “significantly reduced the power and weight of vehicles sold in the late 1970s and early 1980s to increase fuel economy, but technological progress caused weight and power to recover in the long run.” However, they also note that “consumers value an increase in power more than a proportional increase in fuel economy.”

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July 2012

July 30, 2012
Impacts of Shale Gas Development on Property Values
New York is suing the federal government to force a more comprehensive review of the impacts of hydraulic fracturing on water supplies. The state “says it has shown that fracking generates millions of gallons of wastewater contaminated with toxic metals and radioactive substances,” however the federal government says that data is “unreliable” and “inadequate.”
New research by RFF’s Lucija Muehlenbachs and Beia Spiller investigates how property values are affected by new shale gas wells. They find that the property value of houses that rely on groundwater significantly decreases with proximity to shale wells, but values increase if the homes receive water from public utilities. 
Carbon Emissions from Aviation
This week, the US will host a meeting with a dozen countries that oppose the European Union’s plans to require foreign airlines pay for their greenhouse gas emissions through the EU Emissions Trading System. However, US airlines may be able to avoid that requirement if the US institutes “equivalent” regulation through the Clean Air Act, says RFF Resident Scholar Nathan Richardson. In new research, he explains the EPA’s authority to regulate aviation emissions and describes the flexibility options it could employ if it developed new regulations.   
New on Common Resources, RFF's blog on current research and policy debates: Alan Krupnick and Nathan Richardson on shale gas and federalism; Margaret Walls on the Land and Water Conservation Fund; and Timothy Brennan on paying for electricity reliability.

July 17, 2012

Development and Wildfires

Last Wednesday, fire crews finally contained the Waldo Canyon fire outside of Colorado Springs. Although the combination of dry, hot weather and fuel-rich forests are the obvious drivers of major fires, RFF Fellow Carolyn Kousky argues in the New York Times that housing development can generate additional risks for property loss. Research conducted by Kousky and Fellow Sheila Olmstead shows that federal fire suppression efforts can drive development into fire-prone areas, increasing the possibility of human-caused fires and damage to property.
True Cost of Electric Power
Consumers may be confused that as natural gas prices continue to drop, electricity prices are going up in many areas. Fuel prices do strongly influence the price of electricity, but there are many costs of power generation that are not captured in market prices. RFF Senior Fellows Dallas Burtraw and Alan Krupnick address the true cost of electric power in a new study conducted with REN21. They evaluate the current methods used to capture the true cost of energy and make recommendations for policymakers who wish to incorporate those true costs into their decisions.
Health Benefits of Cleaner Energy
To combat potential shortages, India’s prime minister recently directed the Environmental Ministry to approve 12 new coal mining projects, which will increase current production levels by 25 percent. India relies heavily on coal to fuel its energy production—70 percent comes from coal-fired power plants. Installing simple pollution controls could save hundreds of lives annually, as Senior Fellow Maureen Cropper explains in the latest issue of Resources. Research conducted by Cropper and her team shows that adding controls like scrubbers and coal washing will increase electricity prices, but those costs are far outweighed by the resulting health benefits.

July 10, 2012 

Shale Gas Regulations by State
States and municipalities around the country have been holding their own votes on how to approach hydraulic fracturing for shale gas, with some areas placing moratoria on the process all together. New research from RFF shows the diverse regulatory responses across the 31 states with current or near-future shale gas development. “They are all over the proverbial map in how the regulate any given aspect of shale gas development,” says RFF Senior Fellow and Director for the Center on Energy Economics and Policy Alan Krupnick.
Impacts of Extreme Events
With fires scorching western states, and the eastern half of the United States feeling the effects of fast-forming, fast-moving derechos, it is not hard to see how extreme weather events could have an adverse effect on the economy of the United States. RFF Fellow Carolyn Kousky recently conducted an in-depth review of the current literature on economic costs from natural disasters and examined climate change adaptation options for countries, subnational jurisdictions, and individuals.
Climate Change Polling
Despite soaring temperatures and strange weather, climate change is no longer the top environmental concern of the American public, according to a new poll from the Washington Post and Stanford University. RFF University Fellow Jon Krosnick, who leads the team behind the poll, noted, however, that public support for action remains steady. This message underscores a presentation he made at RFF this past fall about his findings that political candidates who support environmental policies may actually get a boost in election performance.

June 2012

June 25, 2012 

Green Accounting at Rio+20
One of the main topics of discussion at the Rio+20 Earth Summit was “green accounting,” or putting a price on the services that natural systems provide for society. RFF experts have been researching the possibilities and techniques for valuing nature’s services for many years. Visit the resource library on green GDP from RFF’s Center for the Management of Ecological Wealth for an in-depth look at the advantages and challenges of properly valuing the environment.
Measuring Deforestation
According to a new report in Science, previous estimates of greenhouse gas emissions from deforestation were off by perhaps as much as two thirds. The new estimates were developed using satellite imagery and consistent methods across different countries to generate a more accurate picture of forest loss. RFF experts Molly Macauley, Roger Sedjo, and I previously discussed this topic in a Resources article and an RFF report. We highlight the need for improved measurement of the world’s forests and the potential for advancing satellite technology to provide better, more comprehensive data.
Rare Earth Supply
Concerns about the availability of rare earth elements are growing as China, which provides 90 percent of current world supply, warns that its reserves are quickly depleting. Vietnam and Japan are teaming up to begin mitigating the supply problem. A team of RFF experts looked into the implications of rare earth supply restrictions on the U.S. wind energy sector. They found that China’s supply restrictions won’t significantly impact the wind sector because wind is currently such a small share of the U.S. electricity generation profile. Moreover, U.S. manufacturers are not yet extensively using rare earth metals to build turbines, though this may change in the future.
June 18, 2012 
Preparing for Rio+20
The international environmental community is gearing up for the United Nations Conference on Sustainable Development, commonly known as Rio+20. The conference marks the 20th anniversary of the Rio Earth Summit in 1992, which yielded international frameworks for addressing climate change and biodiversity. Expectations are much lower this year, but in the new issue of Resources magazine, Thomas Sterner and Edward Barbier address some of the potential gains that could result from a successful conference. Sterner argues that the world’s response to environmental degradation must be balanced with equitable economic progress in developing countries. Barbier explains that new sources of financing are needed if the international community hopes to follow through on its promises.
Answering Questions about a Carbon Tax
In a speech addressing the goals of Rio+20, Christine Lagarde of the International Monetary Fund advocated the use of fiscal policy, including taxes on greenhouse gas emissions, to effectively combat climate change. Her voice joins a growing conversation between U.S. policymakers and economists about whether a carbon tax could be a viable vehicle for addressing climate change and boosting economic growth over the next decade. To help shed light on the issue, a team of RFF experts collaborated to answer frequently asked questions about a carbon tax policy. The questions, collected from discussions with industry leaders, policymakers, and academics, range from issues of designing and implementing such a tax to the associated economic impacts.
The Impact of Regulation on Employment
Some members of Congress are hoping to repeal EPA’s Utility MACT rule, which was designed to limit air pollutants released by coal power plants. A recent op-ed criticized EPA’s statement that the rule would create jobs—because it relied solely on a study by RFF Senior Fellow Dick Morgenstern about how environmental regulations impact employment. Morgenstern recently sat down with Resources magazine to answer the question, “How Does Regulation Affect Employment?” The podcast and transcript of that interview are available here.

June 11, 2012 

Identifying Potential Shale Gas Risks
Last week, experts met at the World Gas Conference 2012 in Malaysia to discuss the sustainable development of natural gas. While industry leaders expressed concerns over too much government regulation, the Executive Director of the International Energy Agency, Maria van der Hoeven, noted that the lack of a regulatory framework could cause the gas to “stay where it is. Underground.”
Also last week, RFF’s Center for Energy Economics and Policy released an analysis that identifies the plausible risks associated with hydraulic fracturing for shale gas. This analysis, known as the Risk Matrix for Shale Gas Development, shows more than 200 “impact pathways” that link activities associated with shale gas development to possible impacts on the environment. The goal of this work is to help decisionmakers be aware of “the potential risks to be considered when developing a well, examining impacts from widespread drilling activities, or writing regulations.
Tax Reform and Energy Policy
With energy prices continuing to rise and economic recovery still underway, government and industry leaders have resumed conversations about the link between energy policies and taxes—from how changing the tax code could boost solar and other renewables to ideas of pricing carbon emissions. The Senate Committee on Finance has also taken up the issue with this week’s hearing, Tax Reform: Impact on U.S. Energy Policy. On Tuesday, June 12, at 10 a.m., watch RFF President Phil Sharp testify before the committee here.
Containing Deepwater Oil Spills
This summer, the Marine Well Containment Company (MWCC) will conduct a live simulation in the Gulf of Mexico to test new equipment to cap potential deepwater oil spills. As interest in deepwater drilling continues to grow around the world, the need for proven safety equipment becomes even more critical.
An RFF assessment of the MWCC emphasizes that “demonstrating improved capacity to contain is one key to reducing this risk.” Authors Robert Anderson, Mark Cohen, Molly Macauley, Nathan Richardson, and Adam Stern also note that third-party expert technical review and quantitative risk assessment are important factors for ensuring long-term deepwater spill containment.


June 4, 2012 

Zoning Ordinances and Urban Sprawl
D.C. Mayor Vincent Gray recently asked Congress for ways to relax the zoning regulations that restrict the maximum height of buildings in the nation’s capital. Zoning codes are powerful tools for shaping the look and feel of cities, and they can also determine if new development occurs in the city or on the fringe. In a new discussion paper, a team of experts—including RFF’s Virginia McConnell and Margaret Walls—examines the influence of zoning restrictions on development in urban fringe communities. They find that zoning requirements of a 2-acre minimum lot size encourage sprawl by keeping “the newly developing region in low-density development,” whereas larger lot size requirements result in more “contained development.”
Cap-and-Trade Revenue in California
Last week, the California Assembly passed a bill that regulates how the state can use revenue from auctioning emissions allowances under its impending cap-and-trade system. RFF Senior Fellow Dallas Burtraw, who has been working with California on the design of the cap-and-trade program, recently investigated the potential uses of such revenue. In two resulting discussion papers, Burtraw and his coauthors provide an overview of the opportunities and challenges associated with this new revenue, and explain how the allowance value can best benefit the state’s electricity ratepayers. In Burtraw’s recent testimony to the Assembly, he highlighted that today’s decisions on revenue use will help determine how California can meet its climate goals in the future.
Fire Suppression and Land Development
Wildfire season got off to a brutal start this year. New Mexico is currently battling the largest fire in the state’s history, while other major conflagrations sear parts of Arizona, California, Colorado, Florida, Michigan, and Utah. Efforts by federal and state governments to suppress fires may actually lead to more development in fire-prone areas, according to RFF Fellows Sheila Olmstead and Carolyn Kousky. Their research suggests that “development is greater on lands benefiting from federal suppression efforts, all else equal,” because the efforts are paid for by taxpayers, not the homeowners located in those areas.

May 2012

May 29, 2012

Managing Space Launch Risk

The launch of the SpaceX rocket is another step toward private companies starting to play a major role in future space exploration. To date, the U.S. launch industry has a perfect safety record in protecting the public in the path of such flights. In regulating the industry, Congress has assigned responsibility to companies for a portion of public damages if any were to result, with the federal government covering additional damages. RFF experts Tim Brennan, Carolyn Kousky, and Molly Macauley offer approaches to balancing the shared risk between the public and private sectors.
Cost-Benefit Analysis in Regulation Review
MIT’s Michael Greenstone recently praised a new executive order that requires the government to review existing regulations to compare the costs of implementation with the actual benefits achieved. Cost-benefit analysis has played a larger role in analysis of government regulations over the past two decades, and not without controversy.
RFF Senior Fellows Winston Harrington and Dick Morgenstern, along with former EPA official Lisa Heinzerling, edited a 2009 report examining the role that cost-benefit analysis currently plays in conducting regulatory impact analysis, including surrounding controversies and avenues for improving its use in the regulatory process.
Carbon Product Labeling
The New York Times recently looked at some of the challenges of green labeling, noting that “it’s difficult to judge what ‘environmentally friendly’ really means.” In a recent discussion paper, RFF University Fellow Mark Cohen and co-author Michael Vandenbergh investigate carbon footprint labeling programs for consumer products. They find that while carbon labels could help consumers make informed choices, the labels would require third-party verification and globally accepted uniform methodologies to accurately capture the actual emissions associated with products.

May 21, 2012

EPA Regulations and the Electricity Sector

EPA Administrator Lisa Jackson signed off on final mercury and air toxic standards last week. Some groups state that the public health benefits of the standards are important. Others argue that these standards will drive a significant number of existing coal-fired power plants into retirement—and this potential outcome is exacerbating concerns about the reliability of generation supply, electricity price stability, and industry revenues.
According to new research from a team of RFF experts, the electricity sector is expected to comply with the rules without major disruptions. They find that the regulations lead to major investments in pollution control technologies, but no substantial reductions in generating capacity before 2020. The regulations may also lead to small electricity price increases and decreases in producer profits.
Governance Innovations for Water Management
Last week, American Rivers announced the 2012 list of America’s Most Endangered Rivers, with the Potomac River ranked in first place. Cleaning up the river will require coordinated actions among the diverse stakeholders in the Potomac watershed, which stretches across four states and the District of Columbia.
In a new issue brief, RFF Center for the Management of Ecological Wealth Co-Director Lynn Scarlett outlines the challenges of governance among multiple jurisdictions within the same watershed and identifies potential solutions. She suggests that “network governance” could make the management of watersheds more flexible and responsive, while maintaining accountability.
EPA’s Power Plant Standards
This week EPA will hold two public hearings on its proposed greenhouse gas emissions standards for power plants. RFF Resident Scholar Nathan Richardson made some quick observations about the rule, discussing the net costs, the rule’s flexibility, how the standards could change over time, and how the rule interacts with other rules for coal.
May 14, 2012
The Value of Observation Satellites
The Washington Post recently lamented the decaying state of the country’s system of Earth observation satellites and Congress’s unwillingness to provide funding to maintain it. The Post’s concerns come from a report released by the National Research Council, which warns of a rapid decline in the number of Earth-observing instruments in orbit due to their age, possibly down to 25 percent of the current fleet by 2020. RFF Vice President for Research Molly Macauley serves on the committee that generated the report and has spent many years investigating the value that information from Earth observations can provide for solving environmental problems. Some of her work has focused the Landsat Program, which uses satellite imagery to create an unparalleled database for studying natural resources.

Oil Sands and Environmental Risk
Last Thursday, the House Committee on Science, Space, and Technology held a subcommittee hearing on the potential for developing unconventional energy resources, including oil sands and oil shale. Director of RFF’s Center for Energy Economics and Policy and Senior Fellow Alan Krupnick took a trip to Alberta, Canada, where oil sands extraction is in full swing, to check out the environmental impacts for himself. In his blog post on Common Resources, Krupnick describes different extraction techniques for oil sands and the impacts they have on the surrounding landscape.

Conservation Return on Investment
Ecosystem services and conservation investments have gained traction in the environmental movement over the past few years, but the chief scientist of The Nature Conservancy thinks they should be more fully embraced. Peter Kareiva has been delivering direct and expansive talks over the past few months about the follies and future of efforts to protect ecosystem services. One of his key points (starting around 40:00 in the video) is that investing in natural systems is good for people and the planet. Jim Boyd, Juha Siikamäki, and Becky Epanchin-Niell—experts at RFF’s Center for the Management of Ecological Wealth—have gone one step further and laid out ways to improve conservation return on investment analysis to better measure and value ecosystem services.  

Clean Energy Standard on the Hill
This Thursday, RFF Research Director and Senior Fellow Karen Palmer will testify before the Senate Energy and Natural Resources Committee on the implications of the proposed Clean Energy Standard bill. Check the link to read her testimony and watch the hearing live.

May 7, 2012

Digging into the Clean Energy Standard 
Earlier this year, Senator Jeff Bingaman (D-NM) released the Clean Energy Standard Act of 2012, a bill that requires the United States to produce more than 80 percent of its electricity from “clean” sources by 2035. Last week, the U.S. Energy Information Administration released its latest analysis of the bill, estimating that there will not be a significant effect on electricity prices until after 2020 as power generation moves away from coal to natural gas, nuclear, and renewables. 
RFF Center Fellow Anthony Paul, Senior Fellow and Research Director Karen Palmer, and Senior Research Assistant Matt Woerman recently completed their analysis of the bill, utilizing RFF’s in-house electricity model, Haiku. The team finds that the bill will not achieve its 2035 goal due to price controls and exemptions for small utilities. As for electricity prices, the team contends that significant increases do not occur until after 2025.
Valuing a Clean Chesapeake
Cleaning up the Chesapeake Bay has always been a contentious regional issue, but the latest controversy over EPA’s plan to regulate pollution in the country’s largest estuary unexpectedly pits environmental groups against one another. There are economic and environmental benefits to reducing the levels of pollution from runoff in the Bay, but policymakers first need to figure out how to measure and monetize those benefits.
In an RFF discussion paper released last fall, Senior Fellow Maureen Cropper and Research Assistant William Isaac outline how to measure and monetize the benefits from a cleaner Chesapeake by focusing on six specific areas: property values, commercial fishing, boating, recreational fishing, swimming, and non-use value.
Carbon Neutrality of Bioenergy
Bioenergy has often been viewed as a potentially cleaner alternative to gasoline due to the lower greenhouse gas emissions from its production and combustion. Some biofuels, like biodiesel derived from palm oil in Indonesia, are not living up to that potential enough for EPA to include them in its renewable fuels mandate. Bioenergy from wood biomass, however, may be more climate-friendly, according to CFEP Director and Senior Fellow Roger Sedjo. In an RFF seminar held in March, Sedjo presented research that looks beyond traditional life-cycle analysis to assess the carbon neutrality of commercial forests as they react to market dynamics. He contends that energy from wood biomass can indeed be carbon neutral in the long run. Video and the accompanying presentation are available here.

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April 2012
April 30, 2012
Flood Insurance 
The Federal Emergency Management Agency reminded Congress last week that the National Flood Insurance Program (NFIP) will expire at the end of May unless Congress takes action to extend or reform it. While the NFIP is one of the key tools the federal government uses to compensate victims of natural disasters, RFF Fellow Carolyn Kousky and Resident Scholar Len Shabman note that direct federal aid for disaster relief is not as generous as generally perceived. The misperception may lead people to misinterpret their ability to recover from major flooding. Kousky and Shabman recommend that flood risk communication programs be more explicit about the limits of direct aid.
Last week, the Washington Post reported on concerns about whether eco-certification programs “deliver on their promises.”  RFF’s new blog, Common Resources, highlights research by Senior Fellow Allen Blackman, who finds the evidentiary base for the success of these programs is remarkably thin. The majority of the evaluations of such programs fail to properly account for “the baseline—what would have happened without the program.” Watch for more on this topic in the upcoming issue of Resources magazine.
Energy Efficiency Financing
Energy efficiency is improving in Sonoma County, California, which has one of the few successful home retrofitting programs in the country. RFF Research Directors and Senior Fellows Karen Palmer and Margaret Walls, with Todd Gerarden, took a look into why energy efficiency programs are not more successful in other parts of the country. One major reason, they contend, is a lack of demand for energy efficiency financing from property owners. Other reasons include the riskiness of home efficiency investments, substantial transaction costs, and the inability of lenders’ to distinguish high-payoff and low-payoff investments.
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April 23, 2012

Oil Speculation
Last week, President Obama attempted to do something about high gas prices by cracking down on oil speculators who might be profiting from recent market volatility. His proposal includes increased monitoring of oil markets, harsher fines for firms that manipulate the market, and better market surveillance technology. But is speculation really driving high prices? RFF Gilbert White Fellow James L. Smith will examine that question at RFF’s First Wednesday Seminar on May 2. He and a panel of experts will discuss whether price manipulation in oil markets is a real and important problem. RSVP to attend in person or watch live via webcast and tweet your questions using the hashtag #AskRFF.
Learning from the Gulf Oil Spill
Two years after the Deepwater Horizon oil spill, we are still learning about how it happened and what lasting impact it will have.  Experts at RFF have generated significant research on how such a disaster could have occurred and how to reduce the chances of something similar occurring in the future.
One idea that is gaining traction is called Accident Sequence Precursor (ASP) analysis, which is already employed in the nuclear industry. Low probability, high impact events like the Deepwater Horizon spill occur when a sequence of small and seemingly unrelated failures occur in the system. ASP tracks these events and can deliver a more realistic picture of the potential for catastrophic failure, but it requires tracking accidents in a manner that the oil and gas industry has not yet adopted. RFF’s Roger Cooke, Heather Ross, and Adam Stern have recommended a clear structure for incorporating ASP into deepwater drilling practices.
Unnatural Disasters
According to a new poll, a majority of Americans believe that the extreme weather events of this past year were a result of climate change. In the latest issue of Resources, RFF Fellows Sheila Olmstead and Carolyn Kousky write that much of the damage from extreme events comes from the presence of people and property in risky areas. As the nation enters a new era of major economic losses from extreme events like floods and wildfires, the federal government needs to adapt its policies accordingly. Moreover, Olmstead and Kousky maintain that public policies such as wildfire suppression and federal flood insurance can drive development in areas with a higher chance of loss from disaster.
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April 16, 2012

Prizes Are Good Things, but So Are Patents
Upon learning that he had won the Mark Twain Prize, George Carlin wrote of his happiness about its official label as a prize. In his words, “a prize is something a kid wins.” The White House Office of Science and Technology Policy is indirectly recognizing the kid in all of us with its recent report on the ability of prizes to spur innovation. RFF Senior Fellow Tim Brennan and Vice President for Research Molly Macauley have researched prizes for some time, and recently wrote with Kate Whitefoot on the similarities and differences between prizes and patents. They note that, in an economic sense, the two operate similarly. There are other factors, however, that make one more attractive in some situations to drive innovation amongst competitors. Prizes are excellent for achieving, for instance, a specific goal or product, where patents are better suited to when the end goal is less well defined.   
Natural Gas in Your Tank?
Due to the shale gas boom of recent years, natural gas prices have fallen to their lowest levels seen in a decade. And yet, while there is hope that gasoline prices have peaked for the year, consistently high prices may already be weakening the fragile economy.  Could there a happy marriage in the future between cheap and plentiful natural gas and our ever-present need to quench thirsty cars?
Probably not, according to research conducted by CEEP Director and Senior Fellow Alan Krupnick. He finds that there is likely some room for cost-effective growth using natural gas in heavy-duty vehicles, as the burdens to developing the necessary infrastructure are not as confining as originally thought. Light-duty vehicles, however, do not present the same opportunities because, without major subsidies, natural gas passenger cars and trucks are not cost-competitive with traditionally fueled cars.
Nuclear, Neither Coming Nor Going
The New York Times highlights the current conundrum of nuclear power: it’s not going away, but it’s certainly not expanding in a meaningful way. The Nuclear Regulatory Commission recently greenlighted construction of new reactors for the first time in 30 years, but the Georgia project has already run into trouble. The future role of nuclear power is one of many issues covered by “Toward a New National Energy Policy,” a major joint report from RFF and the National Energy Policy Institute. The report finds that electricity generation from nuclear power will likely remain roughly the same over the next 20 years without some kind of carbon pricing policy.
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April 9, 2012

Floods and Green Infrastructure
While river floods this spring may be less severe than in previous years due to the warm winter and resulting lack of snowfall, summer tropical storms remain a threat. Some people who lost their homes to last year’s Hurricane Irene remain in FEMA-issued housing.
Research by RFF Fellow Carolyn Kousky indicates that part of the reason floods can be so devastating is that government flood insurance programs subsidize construction in flood-prone areas. Other research presented at last week’s RFF First Wednesday event shows how preserving natural landscapes and better land-use management—building what’s known as “green infrastructure”—can protect against floods. RFF Research Director and Senior Fellow Margaret Walls noted that targeted purchases of undeveloped land in areas prone to flooding can reduce expected flood damages. Resident Scholar Len Shabman discussed a successful pilot program to compensate Florida ranchers for retaining rainwater on their lands, improving water flow through the Everglades.
Energy Efficiency Financing
Economic analysis indicates that energy efficiency is among the cheapest ways to reduce pollution associated with producing power. But improving efficiency in the real world is hard. Countless methods have been tried, including subsidies, monitoring systems, prizes, and even gamification via a Facebook app. But the classic method is through government financing of efficiency investments.
A new RFF report by Margaret Walls, Karen Palmer, and Todd Gerarden analyzes different energy efficiency financing options. The authors find that most such programs reach relatively few property owners, in large part because demand for efficiency investments—even with the programs’ help—remains low. This may in part be due to lack of information—a gap government can help fill.
California’s Cap and Trade Program
California’s greenhouse gas cap-and-trade system is moving ahead, but the path is not entirely smooth. The state recently announced it will push its initial permit auction back to November to give regulated firms more time. Last week, RFF Senior Fellow Dallas Burtraw testified before the California State Senate on program design issues. He noted that the forthcoming auctions “will do as well or better than free allocation in identifying the efficient price of allowances in the market and providing incentives” and called use of auction revenue “probably the most important design feature from both efficiency and equity perspectives.”
However, a recent lawsuit by environmental groups may signal trouble for the program. The groups claim offsets allowed by the program are an improper compliance loophole. In the latest issue of Resources, Director of RFF’s Center for Climate and Electricity Policy Ray Kopp makes an argument for the importance of offsets in controlling costs of cap-and-trade systems, labeling them the least-cost option with the most flexibility for compliance.

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April 2, 2012

Could the New EPA Rule Mean No New Coal?
Last week, EPA proposed new carbon performance standards for fossil-fuel power plants. The standards would require new plants to meet an emissions target that can only be met by natural gas plants, or coal plants with as-yet-unavailable technology for carbon capture and storage (CCS). The new proposal has been expected since a 2010 settlement agreement, and was repeatedly delayed. It also covers only new plants—and it’s unclear when or if future standards covering the much larger and more important installed base of existing power plants will be released.
In an RFF feature, I offer some quick thoughts on the new proposal. One observation is that EPA claims that the standards would have no costs, because it predicts no new coal plants would be built anyway, largely due to the low cost of natural gas. But if a rule imposes no costs because it causes no change in behavior, that means it has no benefits either. So why make the rule? In the feature, I suggest a few possible reasons.
Other recent RFF work is also highly relevant to this proposal, its impact, and the future of the U.S. power mix. As I noted last week, a new paper by RFF’s Dallas Burtraw, Karen Palmer, Anthony Paul, and Matt Woerman models trends in the U.S. power sector, both with and without recent EPA regulation. It finds that “recent downward adjustments in natural gas prices and electricity demand have a substantially larger impact on electricity prices and the generation mix than do the new environmental rules.” This parallels EPA’s claim that the new proposal will have little impact, though it is important to note that the RFF study does not include the proposed standards.
Another new RFF paper by Dalia Patino Echeverri, Dallas Burtraw, and Karen Palmer looks at deployment of CCS technology under different policies. The study finds that policies that allow flexibility in CCS deployment, such as those that impose a surcharge on plants without CCS, generally result in earlier introduction of CCS (with some exceptions when operators take a wait-and-see approach).
These are only the latest projects in a rich vein of recent research by RFF experts on this issue. Other work by Dallas Burtraw, Art Fraas, and I focuses on EPA’s options for the existing-source counterpart to the new source standards released last week. We find that EPA has the legal authority to allow flexible, market-based approaches, specifically identify tradable standards as a viable tool, and demonstrate that this option is likely to be substantially more cost-effective.
Look for more research on the EPA proposal and its implications from RFF in the near future.

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March 2012

March 26, 2012
Nuclear Decommissions
Nuclear power plants aren’t just expensive to build—they’re also expensive to decommission, at as much as $1 billion per reactor. The New York Times reports that many operators have not saved enough money to cover these costs, partly due to poor returns on investments during the recession. This may force operators to let plants sit for decades after they are shut down.
A recent paper by RFF Fellow Lucija Muehlenbachs studies the decisions faced by owners of industrial facilities that reach the end of their useful lives. Decommissioning is expensive and irreversible, so operators may choose not to decommission if there is a chance of reactivation. But “temporary” mothballing can be an attractive option even if there is no intention to reactivate. This is broadly the decision faced by nuclear plant operators, though the study focuses on closure decisions at Canadian oil and gas wells. Muehlenbachs finds that “the option to temporarily close is being widely used to avoid environmental remediation” and that “this behavior is likely generalizable to other industries that have high clean up costs and are also allowed extended temporary closures.”
What Cheap Gas Means for Coal Power
Low natural gas prices, among other factors, have weakened the economic case for new coal plants. Bloomberg reports that U.S. consumption of coal is in decline, with EIA projecting it will reach a 16-year low in 2012. This means less pollution from coal, but also lower prices—which have hit mining communities in Appalachia hard.
In a new discussion paper, RFF experts Dallas Burtraw, Karen Palmer, Anthony Paul, and Matt Woerman analyze these and other trends, modeling the impact of new EPA environmental regulations, and also looking at “secular trends”—what’s occurred in recent years regardless of changes in environmental policy—largely driven by low fuel prices and changes in demand. Among the findings: these trends “have a particularly large effect on the profitability of coal fired generators.”
The President’s Energy Policy on Tour
President Obama last week launched a four-state speaking tour to discuss his goals for energy policy. His “all of the above” approach to energy sources largely mirrors what he advocated in his State of the Union address. RFF Vice President for Research Molly Macauley discussed many of these proposals for the National Journal after that speech, concluding that the president’s goals are “laudable” but inferior to “a straightforward, modest carbon tax with revenues used to reduce payroll and corporate income taxes.”
The President also proposed ending subsidies for fossil fuel production. In a 2009 issue brief, RFF’s Stephen Brown and Maura Allaire found that effects on oil and gas production and consumption from ending the subsidies would be small.
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March 19, 2012

Nuclear Safety
As part of a series of reports on nuclear energy, The Economist recently looked at plant safety. It’s conclusion? Safety requires constant vigilance: “defense in depth”, regular review, and a critical eye—“nuclear safety can never be a technological given, only an operational achievement.”
The article praises the U.S. Institute of Nuclear Power Operations (INPO), the industry’s self-regulatory body. Phil Sharp, RFF President and a member of the President’s Blue Ribbon Commission America’s Nuclear Future, notes in the article that “INPO meetings at which the bosses of nuclear operating companies are called to account for their plants’ failings in front of their peers are unlike anything he knows of in the private sector.”
Rare Earths and Trade
The United States, along with the European Union and Japan, has announced action in the World Trade Organization against Chinese restrictions on export of rare earth materials. These materials are crucial for manufacture of some electronics, wind turbines, and other devices. China claims its trade restrictions are aimed at environmental protection and are legal.
In a recent report, a team of RFF experts analyzed supply chains for rare earth materials and their implications for U.S. wind energy. The report noted that while Chinese export restrictions don’t appear to currently have a large effect on the U.S. wind industry, they could eventually lead to marked competitive advantage for Chinese turbine producers if China adopts coordinated industrial policies. Even if this happens, however, the report points out that, over the long term, new rare earth supplies or substitutes are likely to erode any such advantage.
Renewables and the Grid
A recent NPR story highlights the need for U.S. electricity grid to adapt to accommodate increasing use of renewable energy. Wind and solar, unlike other energy sources, are variable and only available at certain times, forcing grid operators to make ever more complex utilization and dispatch decisions.
This complexity amplifies the need for good analysis and modeling of how renewables function within the grid, though it also makes that analysis harder. RFF has a rich library of research on renewables and the grid. A 2008 paper by RFF scholars Anthony Paul, Karen Palmer, and others analyzed modeling of “green corridors”—transmission projects in federal lands that increase interregional capacity. The study found significant effects on renewable siting and deployment, suggesting that “whatever the policy aims, coordination between renewables and transmission policies is imperative if new measures are to be optimally effective on either front.”
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March 12, 2012

Natural Gas Vehicles and EPA Standards
Chrysler has announced plans to release the first factory-model vehicle powered by natural gas, a pickup truck set to be available by July. GM also announced similar plans for two 2013-model vehicles.
While Director of RFF’s Center for Energy Economics and Policy Alan Krupnick has been skeptical of the benefits of consumer natural-gas-powered vehicles, he notes that heavy-duty truck fleets might present a better opportunity. A new RFF issue brief, Krupnick and Senior Fellow Winston Harrington examine late-2011 standards for heavy-duty vehicles issued by EPA and the National Highway Traffic Safety Administration (NHTSA), which include substantial credits for natural-gas-powered-vehicles. They note that credits for natural gas “expose a fault line” between EPA’s responsibility to protect public health and NHTSA’s mandate to reduce oil consumption and energy dependence—which would support an even greater incentive for natural gas vehicles.
Benefits of Ocean Zoning
A recent study published in the Proceedings of the National Academy of Sciences indicates substantial benefits from well-designed ocean zoning, or marine planning—such as that proposed by the Obama administration. Research by RFF University Fellow James Sanchirico also found favorable outcomes associated with ocean zoning policies. In a Scientific American editorial, Sanchirico argued that “Zoning would give all parties with a stake in the seas the security of knowing certain spaces are designated for their desired uses. Commerce benefits because environmental groups are less likely to block industry on a case-by-case basis. Marine ecosystems benefit because conservation finally gets an equal seat at the planning table with the fishing and petroleum industries.”
Natural Gas as a Bridge Fuel?
Natural gas is now cheaper than it has been in some time, largely due to booming U.S. production from shale. The U.S. Energy Information Administration recently revised its first-quarter spot price projection to $2.62/MMBTU.
Many have suggested that natural gas could be a relatively cost-effective and lower-carbon “bridge fuel” to future zero-carbon energy technologies. As this RFF infographic illustrates, cheap natural gas has conflicting implications. It makes moving to natural gas less expensive, but it also competes with renewables and nuclear, reducing incentives to invest in technology for those options.
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March 5, 2012

State Parks
Budget shortfalls in many states have led legislators to target state parks, closing them or cutting services to save money spent on upkeep and staff. California controversially plans to close 70 of its 279 parks. North Carolina considered closing its parks every winter, though legislators recently decided against the measure. With state budgets likely to remain a problem in the future, parks may not be out of the woods for some time.
In the recent issue of Resources, RFF Associate Research Director and Fellow Juha Siikamäki suggests states should think carefully before closing parks. He finds that state parks are responsible for around one-third of nature recreation in the United States, about 2.2 billion hours. He also estimates the value of this recreation time to be around $14 billion—far greater than the cost of running the parks. Furthermore, this recreation value is only part of parks’ full value—parks offer many other “ecosystem services.”
Return on Ecological Investment
Governments and nonprofits spend a great deal of money conserving natural areas. For example, The Nature Conservancy recently announced a $2.3 million project, backed initially by Shell Oil, to protect one of the few remaining natural islands on the Texas Gulf Coast. The organization spends as much as $1 billion on such projects annually.
Is it possible to know whether these are good investments? An RFF partnership with the Nature Conservancy, led by James Boyd, RFF senior fellow and co-director of the Center for the Management of Ecological Wealth, aims to find out, by applying return on investment (ROI) methods to conservation. The goal is to quantitatively measure the costs, benefits, and risks of conservation investmentsa difficult endeavor. As Boyd notes, credible, quantitative ROI analysis of conservation projects will challenge conservancies because effects on ecosystem services are not yet straightforward to measure. Nevertheless, conservancies need such hard data and quality assessments to improve their conservation ROI.
EPA and the Courts
The DC Circuit Court of Appeals heard oral arguments for a suite of cases brought by groups challenging EPA’s moves to regulate carbon under the Clean Air Act. Early reactions are that the judges seemed sympathetic to the agency’s position for most of the rules, with the possible exception of one part of the program—the “tailoring rule.”
While the courts will decide the legality of EPA’s actions to date, a suite of RFF research suggests that its climate regulation can be both cost-effective and environmentally significant, at least over the short term, if the agency makes smart choices. RFF work in this area continues.

February 2012

February 28, 2012

Invasive Species

The Department of the Interior's National Invasive Species Awareness Week seems to have come at a perfect time. Last week the federal government announced it would expand efforts to fight against Asian carp invading rivers in Mississippi and Illinois, and federal agents were searching vehicles crossing from Mexico into Arizona for a disease-carrying bu that destroys citrus trees. At RFF's First Wednesday Seminar on March 7th, RFF Fellow Rebecca Epanchin-Niell will moderate an expert panel discussion to help forge insight to improved management and new strategies for reducing the enormous economic and ecological impacts of invasive species. Register online to attend this event in person or watch the live webcast at on the day of the event. Have a question for the panel while watching the webcast? Simply Tweet your question and include the hastag #AskRFF.

The Complexity of Environmental Regulation

Recently, The Economist reported on U.S. environmental regulation, noting that recent regulations, such as those on mercury and suspended revisions to ozone rules, are complex and, critics claim, “job-killing.” While much of this complexity can be attributed to the Clean Air Act and frequent litigation, the effect of environmental rules on jobs remains controversial. A recent New York Times editorial claimed that new mercury rules will be “job-creating,” boosting the clean energy industry.
In a new RFF podcast and article for Resources magazine, RFF Senior Fellow Richard Morgenstern expresses skepticism toward either claim about job effects. He notes that his research shows environmental regulation has little or no effect on net jobs totals, but that this is based on limited evidence and more study is needed.

The Costs of Regulation

The Economist also described the overall burden of federal regulation on the U.S. economy. The article cites a report by the Small Business Administration (SBA) that finds a total regulatory burden of $1.75 trillion (in 2008), but also notes that “many object to the analysis.”

Among the objectors is RFF Senior Fellow Winston Harrington, who argues that the regulatory burden “is a lot smaller than the SBA study found," at least for small businesses. In research critiquing an earlier (and lower) SBA estimate, Harrington notes that it is “over an order of magnitude” larger than the Office of Management and Budget (OMB) estimate. He continues that, “While OMB’s approach has some unavoidable problems, I conclude that there is very little basis for the startling estimates produced by [the SBA study].”

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February 21, 2012

Home Efficiency Codes

State and local governments appear to be adopting energy-efficient building codes at an increasing rate. Maryland recently became the first state to adopt a new 2012 internationally standardized code, which results in an estimated 30 percent average efficiency improvement over codes from as recently as five years ago. Other states and municipalities are weighing whether to adopt the code.
But are building codes an effective way to promote energy efficiency? A study by RFF Senior Fellows Karen Palmer, Margaret Walls, and others looked at energy audits for existing homes, finding that homeowners infrequently follow auditors’ recommendations and noting that “the question remains whether the industry is filling the energy-efficiency information gap.” Building codes circumvent the issue for new homes, at least, but they also restrict consumer choices.
Acid RainEmissions Trading Retrospective
Just over 20 years ago, the 1990 Clean Air Act amendments put in place the first nationwide emissions trading system, aimed at sulfur dioxide pollution that causes acid rain. A new Harvard policy brief with contributions from RFF University Fellow Robert Stavins, and based in part on RFF research, concludes that the acid rain program “is viewed as a success by almost all measures.”
The authors further note that “the cap-and-trade model seems especially well suited to addressing the problem of climate change,” but express skepticism over whether the kind of broad (albeit hard-won) political consensus that led to the 1990 amendments is possible in the current political climate.
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February 13, 2012

New Nuclear Plants Approved

Last Thursday, the Nuclear Regulatory Commission approved construction of two new nuclear plants at the Southern Company’s Vogtle site in Georgia, the first such approvals since 1978. The plants will generate enough electricity to power 1 million homes and use a new design with passive cooling, which, proponents claim, would prevent accidents like that at the Fukushima Daiichi plant in Japan last year.

Is this the start of the “nuclear renaissance” that has been predicted by some in recent years, or is it an isolated development? In a recent RFF Policy Commentary, Lucas Davis is skeptical about new nuclear construction, citing barriers such as permitting difficulties, construction costs, and competing energy sources. Southern Co. has overcome the first of these challenges, and may be insulated from the second by its ability to pass on costs to Georgia ratepayers. The third challenge remains, however.
Tradable Carbon Standards from EPA?
EPA has delayed its promised proposal for carbon emissions standards for coal plants under the Clean Air Act for more than six months, but the measure has been sent to the White House and may soon be approved. Congressional Republicans, who have tried to pass legislation blocking the rules, have now asked the president to abandon the rules, stating that they will mean job losses and cost increases. The final rules appear unlikely to be released before the presidential election this November.
In a new RFF discussion paper, Dallas Burtraw, Art Fraas, and I conclude that EPA can implement flexible, cost-effective tradable standards. These standards would set efficiency or emissions goals but allow plants to trade among themselves to meet them, likely at much lower total cost than traditional one-size-fits-all standards.
Rare Earths
China's dominant position in production of rare earth metals, used most notably in smartphones and wind turbines, has led to price spikes and worries over dependence on a single supplier. Of course, sometimes high prices are the best cure for themselves. Mines outside China are increasing production, and a new refinery in Malaysia large enough to fulfill a fifth of world demand will soon open. Prices remain high, however.
A new report by a team of RFF researchers looks at rare earth supply issues and their implications for wind power in the United States, finding that while the wind industry does not currently rely heavily on rare earths, this may change in the near future. The report also notes that China’s market power over natural resources will be hard to maintain over the long term because of new supplies and technological change.
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February 6, 2012

Nuclear Waste Disposal

The United States should start identifying new possible locations for disposal of nuclear waste, according to the final report of the Blue Ribbon Commission on American's Nuclear Future. RFF President Phil Sharp, a member of the group, noted that although it may be some time before Congress can implement a new plan, this is not an excuse to delay looking at alternative sites. Sharp also pointed to the Waste Isolation Pilot Plant in New Mexico as a successful project that shows some increase in public acceptance and appreciation of related economic benefits.

Coal on the Mexican Border

Hearings are being held over whether mining of low-quality coal will be allowed in south Texas. Local opinion is mixed–some favor the mine and its jobs (local unemployment exceeds 13 percent), while others oppose it on environmental grounds. The coal cannot be sold in the United States, so would presumably be burned in Mexican coal plants.

RFF Senior Fellow Allen Blackman and colleagues recently looked at the health effects of coal plants built just across the border in Mexico that supply power to the United States. These plants are not subject to U.S. regulations, but their emissions do cross the border. The study found that the health impacts of these emissions were "limited, but nontrivial," and valued damages at around half a million dollars per year. The authors suggest that these cross-border plants should be regulated, perhaps by requiring that they meet U.S. emissions standards in order to export power across the border.

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