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Notes on Today’s Existing Source Rule

Today, EPA announced proposed performance standards for existing power plants under the Clean Air Act (also known as the existing source performance standards, or ESPS). Attention to the proposal is deservedly high, and it’s a monster of a rule (645 pages, at least in this unformatted version). That means general overviews are already out, and in-depth ones will have to wait. But there is still plenty to say today. Last week, I listed the five things I was most interested in seeing in the rule. Here’s how they came out.

First, this post will be about some in-the-weeds details. That’s likely what you come here for, so I doubt that’s a problem. But it’s worth taking a step back and appreciating that this proposal, if it survives political and legal challenge, will be the single most significant action on climate the U.S. government has ever undertaken. It won’t be successful unless it can move other countries to take action, but it has a better chance of doing that than any speech or vague commitment. It’s far from perfect in its current form, and will remain flawed in important ways, but it gets a lot of emissions reductions at reasonable cost, and it’s what we’ve got. Someday soon I hope we can replace it with something even better.

/editorial

Second, a point on structure. The proposal would set a separate goal for each state based on a formula that takes into account the various emissions-cutting opportunities available in that state’s power sector. This is similar to an approach taken in NRDC’s shadow proposal from last year (so some credit goes to them for either prophecy or influence). There are pros and cons to this strategy, particularly in terms of implications for states that are big importers or exporters of power. It will be interesting to see what energy economists and engineers predict.

1) Emissions

The big headline is 30% emissions cuts from the power sector relative to 2005 by 2030. That’s quite large – over 500 million tons of CO2 per year. Most of those reductions (25%) appear to come by 2020, though a closer reading reveals states have some flexibility to push compliance out toward 2030 so long as they show they are making progress. That explains why, as Michael Levi observes, the 2030 target is not much tougher than the 2020 target. Think of it as a “2020s” target and a final push goal in 2030. I suspect that EPA expects these targets will be superseded by 2030, either by a new rule or, I think much more likely, by legislation (presumably setting a carbon price).

Also, remember that emissions have declined since 2005 – a good chunk of that 30% is already baked in.

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5 Things to Watch for in Monday’s ESPS Proposal

On Monday, President Obama is set to announce proposed regulations limiting emissions from the existing fleet of power plants. These existing source performance standards or ESPS will be the most important part of the administration’s climate policy and, as my colleague Dallas Burtraw likes to point out, the most significant action any President will have taken on climate change. I’ve been working to understand what these regulations might look like for almost 5 years, and over that time I’ve seen attention to them gradually increase.

It seems like this week everyone has something to say, including major studies from the U.S. Chamber of Commerce (with some flaws) and Harvard/Syracuse, and greatly increased media coverage. That coverage is good since the rules are important. Anyone interested in energy and climate should be paying attention. But if you’re getting up to speed on this my advice is to wait until next week. Then we’ll actually have something to talk about. But if you can’t resist, below are the five things I’ll be looking for most when the proposal is released. I’ll come back to these on Monday and explain how they turned out.

1) Emissions Most observers will focus on the rule’s stringency – how much will they cut emissions, and how quickly. My guess is that the proposal will be quite ambitious – the NYT suggests 20% emissions cuts from coal, which translates to 6% of total U.S. emissions. That’s a substantial step towards the President’s Copenhagen pledge of 17% cuts by 2020. But details matter here – what’s the baseline, what’s the timeline for cuts, etc. The stringency targets are important, but it will be equally important to look behind the headline numbers.

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Making Sense of the Chamber’s Study of Coming Climate Rules

On Monday, EPA is set to release proposed new rules limiting carbon emissions from existing power plants. Along with many others, we at RFF have studied the potential implications of this policy for the economy and the environment for some time. While Monday’s release is only a proposal, it will for the first time give analysts something concrete to work with.

In what is likely to be the last significant analysis of the coming regulations before their release, the U.S. Chamber of Commerce released a study this week with dire predictions. Among other results, the study finds that the total cost of the existing-source rule will exceed $50 billion per year through 2030 and lead to 224,000 lost jobs every year.

What should we make of these results?

This is not a slap-job affair; it is an expensive study, with methods and writing that cannot easily be discounted. However, the study suffers from quick conclusions, questionable assumptions, and some errors.

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This Week in the RFF Library Blog

Each week, we review the papers, studies, reports, and briefings posted at the “indispensable” RFF Library Blog, curated by RFF Librarian Chris Clotworthy.


A Carbon Tax in Broader U.S. Fiscal Reform
[From Foreward] This report by Adele Morris and Aparna Mathur, economists with the Brookings Institution and the American Enterprise Institute respectively, examines the issues and options for designing one type of carbon pricing mechanism—a carbon tax. The authors find that a $16 tax on carbon could raise more than $1.1 trillion in the first 10 years and more than $2.7 trillion over a 20-year period. A broader tax base that included emissions of other greenhouse gases (e.g., non-energy carbon dioxide and methane) would raise even more revenue. This mechanism could be included in a revenue-neutral tax reform bill that reduces taxes on productive activities, such as labor, investment and saving, by establishing a tax on harmful pollution… — via C2ES

Markets Matter: Expect a Bumpy Ride on the Road to Reduced CO 2 Emissions
[From a Climate Wire article by Tiffany Stecker, sub. req’d] U.S. EPA’s eagerly anticipated power plant rule could bar states from using the most cost-effective means for cutting greenhouse gases, an industry-backed paper finds… not all states are created equal, and not all market structures operate in the same way, said [managing editor of report, Cliff] Hamal. Some markets are regulated by public utility commissions, while others are not. Some utilities are vertically integrated — meaning they control the entire supply chain, from power generation to selling to the electricity customer. Other states’ utilities rely on wholesale electricity, meaning the electric company must buy it from power plants. This situation is likely to result in high prices to cut emissions and fewer incentives for utilities to make needed changes to lower carbon, said Hamal… — via Navigant

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Resources Magazine: Private Funding of Public Parks, Assessing the Role of Philanthropy

With private donations making up an increasingly large share of city parks’ revenue, Margaret A. Walls explores the downsides of a heavy dependence on philanthropy.


Source: wallyg / flickr

Source: wallyg / flickr

In 2012, a hedge fund manager made headlines by donating $100 million to the Central Park Conservancy, the largest gift in the park’s history. Though the gesture was initially applauded, it soon faced scrutiny from critics who questioned whether a gift to an already well-funded park should be considered tax-deductible philanthropy, especially when parks in other parts of New York remain chronically underfunded.

This gift highlighted the complicated, ongoing relationship between public parks and their incorporation of private donations. Many communities currently look to philanthropy to fill gaps in park funding—but is this a good idea? The overall increase of philanthropy’s role merits a closer look, as well as whether traditional tax-based methods might be better long-term solutions.

Conservancies and Public–Private Partnerships

Conservancies, “friends of the park” groups, foundations, and other park advocacy organizations have become part of the park landscape in many urban areas. Much of their funding is received through donations, which is mainly used for capital improvement projects, special park activities and programs, and lobbying and advocacy on behalf of the parks. In some unique situations—for example, Central Park—these organizations also are covering park operating costs.

Public–private partnerships that use little or no public funding are also becoming more common in urban environments. In these partnerships, operating revenue comes from a range of outside sources that stretch beyond donations, including user fees, concessions, and restaurant revenue. Money also can be drawn in through property development and in-park fees, as well as from households and businesses located immediately outside of the park’s boundaries. For example, the Bryant Park Corporation—a nonprofit, private management company that operates Bryant Park in Manhattan—created a business improvement district for properties surrounding the park, and those businesses pay the park an annual property assessment. The corporation determines this amount, but it cannot exceed 3 percent of property taxes collected by the city.

Questions about park-based groups were included in a 2009 survey conducted by researchers at RFF, who polled urban park directors about their operations and funding. The 44 directors disclosed that a total of $143 million was generated by donors, conservancies, and foundations in the most recent fiscal year, with only five reporting that they had not received any private contributions. In a separate RFF survey, park organizations were confirmed to be largely funded by donations: 63 percent of the annual revenue of those surveyed was marked as having come from individuals, corporations, and foundations.

Read the rest of this article.

Conservation Return on Investment Analysis: Three Case Studies

source: hmj / flickr

Great Bear Rainforest (Source: hmj / flickr)

An increasing number of conservation projects designed to address ecological management, protection, and restoration are being judged based on the investment returns they are able to produce. The costs, benefits, and risks of these projects can all be assessed using conservation return on investment (ROI) analysis, a method to help conservancies prioritize possible programs based on their relative expected yields. In order to assess current ROI capabilities, analysis barriers, and areas of potential improvement, in a new RFF discussion paper, I took a look at three case studies, focusing on large-scale conservation projects in North and South America.

Brazil’s Atlantic Forest region currently operates under a payments for ecosystems services (PES) program, as well as the “Extrema” program, a system which monitors 551,000 acres of area watershed. The area’s severely degraded watershed and high levels of deforestation have motivated conservation projects to preserve the system’s role as a water source for São Paulo. These projects feature several monitoring and modeling innovations which assist in ROI analysis—including baseline vegetation mapping and land cover assessments—though implementation issues for some observation and budgetary plans remain. Many benefits of these programs have also likely gone unmeasured, and could be identified through a social or economic program evaluation.

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This Week in the RFF Library Blog

Each week, we review the papers, studies, reports, and briefings posted at the “indispensable” RFF Library Blog, curated by RFF Librarian Chris Clotworthy.


BLM Failed to Inspect Vulnerable Oil Wells, Relied on Outdated Rules and Guidance : GAO
The government has failed to inspect thousands of oil and gas wells it considers potentially high risks for water contamination and other environmental damage, congressional investigators say…Investigators said weak control by the Interior Department’s Bureau of Land Management resulted from policies based on outdated science and from incomplete monitoring data…The audit also said the BLM did not coordinate effectively with state regulators in New Mexico, North Dakota, Oklahoma and Utah… — via NPR

Estimating Local Mortality Burdens Associated with Particulate Air Pollution [UK]
The increase in mortality risk associated with long-term exposure to particulate air pollution is one of the most important, and best-characterised, effects of air pollution on health. This report presents estimates of the size of this effect on mortality in local authority areas in the UK, building upon the attributable fractions reported as an indicator in the public health outcomes framework for England. It discusses the concepts and assumptions underlying these calculations and gives information on how such estimates can be made… — via Public Health England

National Security and the Accelerating Risks of Climate Change
In this follow-up to its landmark study, National Security and the Threat of Climate Change, CNA Corporation’s Military Advisory Board (MAB) re-examines the impact of climate change on U.S. national security in the context of a more informed, but more complex and integrated world… — via CNA Corporation

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Resources Magazine: Surveying American Attitudes toward Climate Change

Despite the fact that the nation’s leaders continue to debate the existence of global warming, the American public appears to be nearly united on the topic—and has been for quite some time. According to a survey conducted by RFF, Stanford University, and USA Today, 73 percent of Americans say that the world’s temperature has been going up over the past 100 years (Figure 1). Responses to the same question, asked in previous studies, have been quite consistent over time. For example, in 2010, that number was 74 percent, and in 1997, it was 77 percent.

Figure 1. Has Global Warming Been Happening?

Figure 1. Has Global Warming Been Happening?

Another issue under debate is whether humans have been causing Earth to get warmer, or whether warming has been part of a natural cycle. When asked about this in 1997, 81 percent of Americans attributed warming at least partly to human activity. That number was 80 percent in the 2013 survey (Figure 2).

Read the rest of this article.

Adaptation and Liability

A class-action lawsuit (complaint here) by Farmers insurance against Chicago and other Illinois cities has gotten some attention (e.g., here, here, and here) because of its connection with climate change. In simple terms, Farmers (along with other insurers and property owners) suffered a lot of damage as a result of floods in April of last year, most notably in the form of sewer backups into homes and businesses. Farmers claims in the lawsuit that local governments in the area could have done more to prevent this damage, and moreover should have been better prepared since rainfall has increased in the Chicago area in recent decades, ostensibly as a result of climate change.

Commentators have lept to draw broad conclusions about the insurance industry’s reaction to climate and implications for adaptation policy at the local level. For example, Rob Moore at NRDC argues that “[this l]itigation is a symptom of what happens when the response to a recognized problem is insufficient. ” I don’t agree with that view as a general rule – often litigation or at least the threat of litigation is the first and best method of preventing harms – but in this specific case it may be correct. If governments fail to adapt to changing conditions, they should expect litigation as well as political pressure. It seems premature to declare broad conclusions based on a single, newly-filed case, however, and trying to do so risks simply fitting the case into one’s preexisting worldview.

Instead, it’s worth taking a closer look at the case itself first. It strikes me as unusual – admittedly I’m no expert in insurance cases or even civil litigation generally, but I wouldn’t have expected governments to be liable for these kinds of harms. Almost none of the coverage of the case has explained why Farmers thinks they are. I’ll try to do so here. Read More

RFF on the Issues: Managing Coastal Flooding Risks; Ice Sheet Collapse

Managing Coastal Flooding Risks

Alabama port cities, such as Mobile, have the potential to be devastated by “as much as 25 feet of water” from rising seas, according to federal studies. However, local governments can “adopt land use strategies that manage risks effectively,” writes RFF’s Carolyn Kousky. For example: “More flexible property rights, such as rolling easements, have been suggested to allow for private use of the shore until inundation occurs.” RFF’s Margaret Walls suggests that communities might want to consider transfer of development rights to bring about such land use change. She notes: “Importantly, there is no direct cost to the government except the administrative costs of running the program.”

Ice Sheet Collapse

In two recent studies, scientists have reported that the West Antarctic ice sheet has entered an unstoppable “chain reaction” melting phase. One of the study’s authors notes that the “thinning of the ice in recent decades is most likely related to climate change” but that it is difficult to predict how efforts to stop global warming would affect the melt.

At a recent RFF seminar, panelists discussed the challenges of predicting the effects of climate change on ice sheets (video available)—including issues with quantifying the uncertainty associated with the melt. In new research, RFF Chauncey Starr Chair in Risk Analysis Roger Cooke writes that communication about uncertainty must also be improved: “We are now facing decisions that could eventually impact the habitability of the planet as we know it, and we will make those decisions without knowing exactly how current actions affect the future climate . . . . The way forward starts with getting the uncertainty narrative right.”