RFF ON THE ISSUES: Exporting LNG; Local Impacts of Shale Gas; Returning Carbon Tax Revenue

Exporting LNG

Recently, several congressional committees have held hearings to review the benefits and implications of expediting exports of liquid natural gas (LNG). While industry has supported such proposals, environmental groups remain concerned about how increased gas use will contribute to more greenhouse gas emissions (especially methane).“Greenhouse gas emissions need to come down. But fighting exports of gas and oil is way down the list of actions that will be effective and economically sensible,” says RFF’s Alan Krupnick. In a recent blog post, he writes: “To the extent our exports make gas prices in Europe and Asia lower, that may enable more fuel substitution away from coal, lowering greenhouse gas emissions.” Read more commentary on LNG exports from RFF experts here, here, and here.

Local Impacts of Shale Gas

While discussions about natural gas exports have taken the national (and international) stage, local communities around the country continue to feel the direct effects (both positive and negative) of shale gas development. Some regions are experiencing economic booms, while others are eyeing potential risks. On April 10, RFF is hosting a seminar to illuminate the pros and cons of such impacts, including research on the boom-and-bust cycles, how impact fees are being used in local economies, effects on residential property values, and observed changes in truck traffic and accidents in local communities (infographic). Register for the seminar or watch on the web at www.rff.org/live.

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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.


Oil and Gas Wells and their Integrity: Implications for Shale and Unconventional Resource Exploitation
A small percentage of the shale gas sites drilled in the event of a UK fracking boom would probably contaminate the surrounding environment because of problems with wells, a new report has warned, adding that in some cases the damage could be exacerbated because the companies that drilled them will have gone out of business. — via Marine and Petroleum Geology

US Shale Gas and Tight Oil Industry Performance : Challenges and Opportunities
In just seven years, the US shale gas and tight oil revolution has created significant new challenges and opportunities and a new known-unknown that energy market players and analysts must learn to deal with in the years to come. Among all the data and evidence at hand, this comment focuses around the following pieces of industry data that capture a vast amount… — via Oxford Institute for Energy Studies

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RFF on the Issues: Climate Change Information; Effects of Fuel Efficiency Standards

Climate Change Information

The White House announced that it is collaborating with Google to gather and publish data on climate change, with the goal of helping communities prepare for changes in temperatures and water levels “as easily as they use Google maps to get driving directions.” The joint effort will also feature a high-resolution mapping initiative to track climate-related changes to sea levels.

RFF’s Molly Macauley notes that “the quantity and quality of our information will play a critical role in determining the effectiveness of public and private responses [to climate change].” However, in this Resources article, she writes that such information comes at a price, and outlines four principles for deciding if the information “delivers sufficient bang for the buck.”

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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.


Co-producing Wells as a Major Source of Methane Emissions: a Review of Recent Analysis
U.S. EPA’s estimate of this number is at least 100 times lower than what it should be, according to a white paper released yesterday by the Environmental Defense Fund (EDF). The white paper reviewed a series of recent studies that have tried to quantify methane emissions from wells that produce both natural gas and oil… — via Environmental Defense Fund

What We Know: the Reality, Risks and Response to Climate Change (AAAS Report)
…Despite “overwhelming evidence”, the AAAS said Americans had failed to appreciate the seriousness of the risks posed by climate change, and had yet to mobilise at a pace and scale needed to avoid a climate catastrophe. — via American Association for the Advancement of Science

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Research Questions for the Midterm CAFE Review: The Fuel Efficiency Gap

This is the second in a series of blog posts by RFF’s transportation team that will address some of the key research questions for the midterm CAFE review.

traffic jam

Source: iStockphoto

As the first post in this series described, US standards for passenger vehicle fuel economy and greenhouse gas emissions are slated to tighten steeply. By 2025, the greenhouse gas standards require a fleet-wide average that’s equivalent to about 54 miles per gallon. The goals of the standards are to reduce greenhouse gas emissions, improve energy security, and reduce consumers’ fuel costs. When the two regulatory agencies that administer the standards—the Environmental Protection Agency and the National Highway Traffic Safety Administration—estimated the costs and benefits of meeting the standards, the estimated value of fuel savings dominates the other benefits, accounting for about 80 percent of the expected benefits. Indeed, these savings outweigh the expected costs of the regulation by three to one.

With such large fuel savings, we would expect consumers to demand fuel-saving technologies and manufacturers to adopt them. But we don’t see this happening in the market place—a situation known as the fuel efficiency gap.

The literature trying to explain this gap is voluminous and varied, but a recent journal article and working paper stand out. Both argue that of all the explanations for the gap, consumer undervaluation of fuel economy benefits is not one of them. Each paper suggests that consumers are willing to pay close to, if perhaps slightly less than, $1 for $1 worth of expected fuel savings. These results are based on the effects of gasoline prices on actual consumer vehicle choices and on vehicle prices.

There are other possible explanations:

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Resources Magazine: Putting a Price on Carbon. Who Gets the Revenue?

Dallas BurtrawOne of the many questions governments must answer when setting a price on carbon is how to allocate the potentially very large revenues that a cap-and-trade or carbon tax program would generate. RFF Darius Gaskins Senior Fellow Dallas Burtraw argues that two perspectives are emerging based on property rights: one views the atmosphere as property of the government, the other as a common-pool resource shared by its citizens. Resources sat down with Burtraw to discuss how this choice affects the efficiency and fairness of a given carbon-pricing program, and what these consequences mean for the political economy and likelihood of climate policy.


Resources: One of the first and most notable cases of using incentives to manage pollution in the United States was the regulation of sulfur dioxide emissions through a cap-and-trade program under the Clean Air Act Amendments of 1990. In that case, the emissions allowances were given to firms based on their historical levels of pollution. You’ve pointed out that using the same strategy for greenhouse gas regulation could have some very important distributional implications.

Dallas Burtraw: The situation for carbon dioxide is very different than it was for sulfur dioxide in 1990, because carbon dioxide is ubiquitous through our economy. If we have a system that gives emissions allowances for free to firms in a competitive economy, we can expect them to forward those costs to consumers through a change in product prices, just in the same way they would a change in their cost for fuel or labor. So it puts industry in a situation of being able to charge consumers for something they themselves have received for free. The consequence can be the prospect for “windfall” profits—that is, changes in revenues that are greater than the changes in costs that the firms actually have to incur in order to reduce their emissions. This has occurred already in Europe.

Resources: So when we create property rights in the environment and acknowledge this common property resource, are we actually creating a source of wealth?

Burtraw: I would make the observation that the introduction of a price on carbon in the US economy would constitute the greatest creation of a federally enforced property right since the opening of the Great American West in the nineteenth century. The land obviously existed previously and was inhabited by Native Americans, just as our atmosphere exists already, and we all breathe it.

Read the rest of this article.

 

RFF ON THE ISSUES: Ukraine energy aid; Belief in climate change

Ukraine Energy Aid

In response to the unfolding Ukrainian crisis, some in the US have advocated using natural gas exports as a way of reducing Russian leverage on Ukraine. However, removing gas export restrictions would still leave the US unable to effectively challenge Russian gas export decisions. In fact, even if the United States had the capacity to export meaningful quantities of liquefied natural gas (LNG), Ukraine does not yet have the terminal and gasification infrastructure to receive shipments of natural gas via the Black Sea. In a recent blog post, RFF’s Joel Darmstadter cites such factors as making it unrealistic to believe that US gas exports could have a “a decisive impact over the next few years, much less on current events.”

Belief in Climate Change

Recently a group of Senate democrats held an all-night session to draw attention to the “impacts of climate change and the benefits addressing it will bring to [the] country.” They called for a need to take action, noting that “climate change is real.”

Results from a new survey by RFF, Stanford University, and USA Today show that a large majority of Americans also believe climate change to be an existing and serious problem, with three out of four respondents stating that it “has occurred in the past century and will likely continue.” RFF President Phil Sharp commented on the consistency of public’s belief in global warming, noting that “hardcore skeptics remain a tiny fraction of the nation.”

A Tale of Two Parks (In One)

Maya Biosphere Reserve

Source: Charlie Watson (USAID/Rainforest Alliance Forestry Enterprises) / flickr

Without intending to, the team of civil servants that in 1990 created Guatemala’s Maya Biosphere Reserve (MBR) launched a forest conservation policy experiment. In an ecologically rich region where ranchers and farmers were illegally clearing forests at an astounding clip, they established a huge (two million hectare) protected area with two distinct management regimes—a core protected area where extractive activity is strictly prohibited, and a mixed-use zone where firms and local communities are permitted to harvest timber on the condition that they obtain Forest Stewardship Council certification. Analyzing deforestation in these two zones can help resolve a longstanding debate about tropical forest conservation: how does strict protection perform relative to mixed-use protection?

In principle, each type of regime has advantages and disadvantages. Strict protection prohibits all, instead of just some, extractive activity. However, it is only effective when regulators are willing and able to enforce land cover change restrictions, which is by no means guaranteed in developing countries. In theory, mixed-use protection can sidestep this constraint because it relies more on local organizations to govern land use.

In the MBR, conventional wisdom suggests that mixed-use protection has dramatically outperformed strict protection, because certified community forest concessions in the mixed-use zone have proven able stewards of their forests. In fact, the MBR is often held up as an example of how mixed-use protection and community forestry can be successfully blended.

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Can There Be a Positive Prognosis for Climate Negotiations?

This post originally appeared on Robert Stavins’s blog, An Economic View of the Environment.

I’m writing this brief essay on board my flight to the USA from Europe (where I participated in a workshop at the Center for European Economic Research (ZEW) in Mannheim, Germany).  It was an interesting event, the substance of which (the “energy-efficiency paradox”) I will write about in the future, but today’s post is stimulated by a news article I read on board my flight, titled, “U.S. and China May Find Agreements Outside Stymied Climate Talks.”

Bad News from Bonn

In Bonn this past week, international negotiations continued under the United Nations Framework Convention on Climate Change (UNFCCC).  The two most important countries in terms of greenhouse gas (GHG) emissions – China and the United States – apparently engaged in a war of words on the fundamental question of who should do what.  In particular, these two giants – and their respective allies in the developed and developing worlds – bickered over their very different interpretations of the Durban Platform for Enhanced Action’s call for an agreement to be reached in Paris in 2015 that is “applicable to all Parties” (countries).

The United States and other industrialized countries have insisted that this calls for an agreement with emissions reduction pledges by all countries (in particular, by the industrialized countries plus the large emerging economies of China, India, Brazil, Korea, Mexico, and South Africa).  But China, India, and most countries in the developing world have maintained that because the Durban Platform was adopted under the auspices of the UNFCCC, it calls only for emission reduction commitments by the industrialized countries.  In previous essays at this blog, I’ve written about the potential promise that the Durban Platform can offer for a departure from the paralysis that has characterized the past 15 years under the Kyoto Protocol with its dichotomous distinction between emissions-reductions commitments for industrialized (Annex I) countries and no such commitments for other nations.  But it is difficult to claim that the rhetoric in Bonn has been encouraging in that regard.

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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. Check out this week’s highlights below:


Keystone XL: Greenhouse Gas Emissions Assessments in the Final Environmental Impact Statement
On June 25, 2013, President Obama announced a national “Climate Action Plan” to reduce emissions of carbon dioxide (CO2) and other greenhouse gases (GHG), as well as to encourage adaptation to climate change. During his speech, the President made reference to the proposed Keystone XL Pipeline project—a pipeline that would transport crude oil derived from Canadian oil sands deposits in Alberta… — via Congressional Research Service

Climate Change Mitigation Through Livestock System Transitions
The livestock sector contributes significantly to global warming through greenhouse gas (GHG) emissions. At the same time, livestock is an invaluable source of nutrition and livelihood for millions of poor people. Therefore, climate mitigation policies involving livestock must be designed with extreme care. Here we demonstrate the large mitigation potential inherent in the heterogeneity of… — via Proceedings of the National Academy of Sciences

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