RFF on the Issues: Clean Air Act court review; China’s smog court case

Note: RFF on the Issues will not be distributed on Monday, March 10.

Clean Air Act Court Review

The Supreme Court recently heard arguments in Utility Air Regulatory Group v. EPA, a case that questions the Environmental Protection Agency’s (EPA) authority to consider greenhouse gas emissions in Clean Air Act permits. Plaintiffs argue that the agency’s move to require such permits has imposed “far-reaching and near-ridiculous regulatory burdens” on states and industries.

RFF’s Nathan Richardson notes that while the case doesn’t directly concern any other parts of EPA’s plans to regulate carbon under the Clean Air Act—including performance standards for power plants, which he calls “the most important part of EPA’s climate regulations”—there’s some reason to worry that a loss for EPA could affect those performance standards indirectly.

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Misplaced Obsessions

The environmental movement has long been and will remain a crucial engine behind environmental policy, but I believe it really needs to reorient itself toward policies that matter, and in the process give up on its misplaced obsessions.

First, environmentalists’ obsession with reducing carbon emissions is NOT misplaced. I am not just worried, but scared for my children and theirs because of the more violent and extreme weather, rising oceans, and warmer climate we will very likely be leaving them.

But I think that the environmental community, having seen relatively comprehensive climate legislation fail, is now operating under two major misplaced obsessions: first, that all fossil fuels must be kept in the ground and, second and more specifically, that natural gas development must be stopped (or at least slowed) because of its fugitive methane emissions—which, if sufficiently large, would make it a dirtier fuel than coal from a carbon perspective.

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Giving Too Much Away?

The Supreme Court heard arguments this morning in Utility Air Regulatory Group v. EPA, a suit challenging the agency’s authority to address greenhouse gas emissions using the Clean Air Act’s PSD permitting program. I have not followed the case closely, and hesitate to make any predictions based on comments at oral arguments anyway. However, one comment made in passing by Solicitor-General Verrilli (arguing on behalf of EPA) could have serious implications, if I’m interpreting it correctly.If you aren’t familiar with the background here, or if you do want some predicitons, see NRDC’s David Doniger, Richard Frank on Legal Planet, or Johnathan Adler at the Volokh Conspiracy.

In any case, some minimal background: in 2007′s Massachusetts v. EPA, the Court ruled that greenhouse gases were air pollutants within the definition of the Clean Air Act, and directed EPA either to regulate GHG emissions from cars and trucks, or explain why it would not do so. Having since issued such rules, EPA concluded that it must also review GHG controls as part of the permitting process for new and modified stationary emitters like factories and power plants. This is because the statute requires (or at least appears to require) new facilities that emit “any air pollutant” to use “best available control technology” to be eligible for a permit.

This, if interpreted strictly, leads to some costly and arguably absurd results. EPA’s attempt to deal with those results while still regulating in this area are what’s at issue in the case. When asked by Justice Sotomayor on what grounds he would prefer to lose, if indeed the court were to rule against him, Solicitor-General Verrilli opted for a creative reading of “any air pollutant” such that it would not include CO2 (see the transcript, starting on page 67; h/t James Coleman). Looking at the permitting program alone, this would be an acceptable result for EPA since it would exclude the many smaller emitters EPA would rather not review, but keep big emitters in if EPA has issued performance standards for them, as the agency is currently doing for power plants.

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Using Natural Gas to Lower Fuel Costs

With low-cost, abundant natural gas now available in the United States and the promise of new fuel and vehicle technologies on the rise, an opportunity may soon exist for industry (and consumers) to expand the use of natural gas in the form of a liquid fuel for passenger cars and trucks.

In new research, RFF’s Arthur Fraas, Winston Harrington, and Richard Morgenstern find that replacing some of the domestic gasoline currently used for these vehicles with natural gas–based liquid fuels could bring economic and energy security benefits. In particular, after accounting for differences in refining, energy density, in-use fuel economy, transport, and related costs—but assuming that the same road taxes are in place as for conventional gasoline rather than the lower taxes currently enjoyed by biofuels—they find that natural gas–based ethanol (especially E85) could yield significant fuel cost savings.

Even when looking at different markets across the nation, E85 stands out as a potential winner. For example, the current price gap between E85 and E10 (which is currently marketed as conventional gasoline in most states) ranges between 31 and 59 cents per gasoline gallon equivalent, but it increases to 52 to 83 cents by 2015 (Figure 1).

Figure 1. 2012 and 2015 Prices of E10 and E85 Gas in Select Cities

Figure 1. 2012 and 2015 Prices of E10 and E85 Gas in Select Cities

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Resources Magazine: Business Motivations for Conservation

Business decisions have a huge impact on natural resource use and environmental quality, so the ability to influence these decisions presents an opportunity for significant conservation gains. How can conservationists tap into the range of factors that drive business behavior and motivate businesses to invest in conservation efforts?

Not surprisingly, most theories of business behavior emphasize financial motivations. A powerful, but incomplete theory is that businesses do not care about the environmental costs they impose on others because “externalized” costs do not affect profitability. The corollary is that environmentally beneficial behavior can be motivated by the imposition of those costs on firms. The need to internalize otherwise external social costs justifies most modern environmental laws and regulations.

Conservationists can focus their advocacy around new, reformed, or expanded government policies to internalize a broader suite of environmental costs on businesses, regulate or prohibit activities at odds with conservation goals, or subsidize desirable conservation behaviors. This strategy resulted in landmark policy and legal innovations in the 1960s and 1970s, and it continues today. But lobbying government to enact such policies is not the only strategy available to conservation advocates.

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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:

Production Tax Credit Incentives for Renewable Electricity: Financial Comparison of Selected Policy Options
Under current law, the production tax credit (PTC) incentive for renewable electricity will expire at the end of 2013. Generally, congressional debate about the PTC falls within a spectrum of options. At one end of the spectrum, proposals have been made to eliminate the incentive. At the other end of the spectrum, proposals include making the PTC permanent. Other proposals, such as temporarily extending and phasing out the PTC over time… — via Congressional Research Service

Oil Sands Economic Benefits: Today and in the Future
Oil sands development is contributing more dollars and jobs to the Canadian economy than some of the nation’s provinces, a new report has found. In 2012, the industry injected into the national economy $91 billion Canadian dollars ($81.7 billion), amounting to 5 percent of gross domestic product, and generated 478,000 jobs, accounting for 3 percent of the country’s employment… — via IHS CERA

Proposed First Update to the Climate Change Scoping Plan : Building on the Framework
The California Air Resources Board released the draft proposed first update to the AB 32 Scoping Plan, which guides development and implementation of California’s greenhouse gas emission reduction programs. The Air Resources Board is required to update the Scoping Plan every five years. — via California Air Resources Board

Energy Rush: Shale Production and US National Security
The US should encourage oil and gas exports as part of a broader strategy that also includes accepting the reality of energy interdependence, taking steps to reduce domestic consumption and diversify supplies, and integrating energy security into strategic policy and military planning, a recent report recommended. — via Center for a New American Security

Public Support for Climate and Energy Policies in November 2013
A large majority of Americans — 83 percent — say the U.S. should make an effort to reduce global warming, even if those efforts have economic costs, according to a new report from the Yale Project on Climate Change Communication. As many as 56 percent of Americans would be willing to pay an extra $100 each year if their power company… — via Yale Project on Climate Change Communication

For more from the RFF Library blog, click here.

RFF on the Issues: Crude oil exports; Destroying ivory stockpiles

Crude Oil Exports

A pair of Senate Democrats has called for a “comprehensive analysis” of the potential effects of lifting the ban on US crude oil exports, including how it might impact gasoline prices. Experts predict that crude oil producers will “struggle to find a market” for their product by the end of the year due to the export constraints and inadequate domestic processing and distribution capacity.

According to new research by RFF’s Stephen P.A. Brown, Charles Mason, Alan Krupnick, and Jan Mares: “US refineries are better suited to process heavy crude oil, while refineries in other countries are better suited to process light crude oil. As a result, lifting the ban on US crude oil exports would allow for a more efficient distribution of crude oil among refineries in the Western Hemisphere and elsewhere in the world” and, ultimately, reduce gas prices. Read the complete RFF issue brief here: Crude Behavior: How Lifting the Export Ban Reduces Gasoline Prices in the United States.

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Ivory Stockpiles: Will Destroying Them Really Help Stop Poaching?

Source: Megan Coughlin / flickr

Source: Megan Coughlin / flickr

Just over five years ago, sanctioned auctions of ivory stockpiled in Botswana, Namibia, South Africa, and Zimbabwe raised more than $15 million for elephant conservation.

Now, Tanzania is set to destroy $50 million of ivory stockpile, following the lead of the US, France, Hong Kong, and China. The US is also taking steps to further restrict ivory trade, banning the import, export, and resale of ivory, and imposing more stringent guidelines for the sale of antique ivory.

Ivory poaching has continued to be a problem since the 1989 ban on international trade in ivory, codified in the Convention on International Trade in Endangered Species of Wild Fauna and Flora (CITES). Since then, we have seen several back-and-forths on the role of legal ivory sales, as of government stockpiles obtained through confiscation and natural wildlife management.

The competing ideas boil down to this question: do the sales of legal stockpiles affect demand more than supply? Governments today are making a big bet on the former. Read More

Resources Magazine: Forever Ours? The Challenges of Long-Lived Environmental Problems

Pharmaceutical residues in waterways, industrial waste lingering in soils, space debris in orbit for hundreds of years, nuclear waste requiring management for thousands of years, and greenhouse gases affecting carbon cycles subject to geologic time-scales: these pollutants are the potentially long-lasting side effects of modern, growing economies and the attainment of ever-better standards of living.

Policymakers seek to protect the public by balancing the costs and benefits of mitigation, remediation, and other strategies to control these problems. Unlike the case of many shorter-lived pollutants, however, these long-lived contaminants are particularly vexing for regulators and citizens alike. Indeed, these long-lived environmental issues could be thought of as a class of problems that are “forever ours,” unique because of their almost unrestrained temporal scale. The contaminants may be present in trace amounts or have other effects that cause only small damages today; thus the public may not feel urgency to take action. But the contaminants may persist and, even worse, accumulate over time to create much greater damage, although in a perhaps very distant future. Some pharmaceutical residues, certain greenhouse gases, and space debris that self-collide to produce yet more debris are examples of pollution with cumulative effects that can worsen to create significant future harm.

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Ending the Export Ban: What It Means for US Gasoline Prices

California Surpasses Hawaii As State With Highest Gas PricesLast week, top Democrats on the Senate Energy and Natural Resources Committee requested a comprehensive review of what would happen—in terms of energy prices, consumer prices, and more—if the US were to lift its ban on oil exports. In a new RFF issue brief, together with Stephen Brown, Charles Mason, and Jan Mares, we tackle one of the most talked-about questions: What would happen to domestic gasoline prices were that export ban to be lifted?

The export ban has been a hot topic ever since the rapid increase in oil production of light sweet crude in the Bakken, Eagle Ford, and Permian basins began to cause bottlenecks in the US oil distribution system and mismatches between refinery capabilities and the characteristics of the oil being produced. Although the United States has considerable oil refinery capacity, most of it is currently maximized to refine medium crudes or heavy, sour crude of the kind generally produced in the United States and imported. And its distribution system has increasingly had to rely on rail and water conveyance with the pipeline system playing catch up. Read More