If I want to know the calorie content of a candy bar or whether a new sweater requires hand washing, I can just look at the label before I buy. Similarly, if I want to know the operating costs for a new refrigerator, I can study the Energy Guide, a federally mandated label for all appliances. But if I’m considering renting space in a 20-story downtown office building, I might have a hard time finding out what to expect in terms of the energy bills. Some signals may exist—perhaps I can see that the windows are new and the building owner discloses the age of the heating and cooling system. Or maybe the building is Energy Star or LEED certified. But suffice it to say that the information will be imperfect, difficult to verify, and probably insufficient if energy costs are important in my leasing decision. Read More
A new study appearing in Nature Climate Change (of which I am a coauthor) explores how institutional considerations of risk affect the cost of large-scale investments in the power sector that increase or reduce carbon dioxide emissions. Unlike previous studies that assume uniform costs for investments, we apply financial charges that vary from country to country and for different technologies. We find that these differences significantly increase overall costs of mitigation (up to 40 percent globally), and even more dramatically alter the pattern of regional effort (with increases up to 100 percent in developed countries with lower investment risk). These results further highlight the challenges facing climate negotiators working to create a long-term, comprehensive post-2020 agreement this year in Paris.
Previous studies assume that firms throughout the world have access to technology and finance at the same cost. However, in the real world, that is not the case. Financial charges vary significantly from country to country depending, for example, on the integrity of judicial systems and the competence and credibility of public administration. Investments in currently non-commercial or politically challenged technologies—such as carbon capture and storage and, in some nations, nuclear power—bear higher financial charges. Read More
In this edition:
- An upcoming RFF First Wednesday Seminar on offshore energy leasing in the Arctic
- RFF climate research featured as part of the US Climate Resilience Toolkit
Arctic Drilling Plans
Shell has announced that it will proceed with its Arctic drilling plans, “assuming timely approval from the US federal government.” The company has spent significant time and money on oil exploration in Alaska’s Chukchi and Beufort Seas, acknowledging that “technical, fiscal, regulatory, [and] political” issues may still affect its Arctic development efforts.
Next month’s RFF First Wednesday Seminar on April 1, co-hosted with the Stanford Woods Institute for the Environment, will highlight efforts by the Obama administration to develop a targeted leasing model and drilling standards tailored to the Arctic. Experts will discuss the strengths and weaknesses of these regulations and the broader framework needed to support integrated Arctic management and prudent development. Register to attend in person or watch the live webcast. Read More
In this edition:
- Commentary on proposed changes to Colorado’s hydraulic fracturing practices
- Recommendations for reducing financial risk through climate investments
Colorado Task Force Recommendations
The Colorado Oil and Gas Task Force created to “resolve land-use conflicts” between residents and oil and gas companies has submitted nine recommendations to the state’s governor. The group supported changes giving locals the opportunity to offer input on drilling projects, but “stopped short of supporting proposals to give any more power to local governments.” Read More
Congestion pricing and driving restrictions offer two different ways for policymakers to address traffic congestion: the former levies fees individuals who drive into or within a designated “charging zone,” while the latter enforces “road-space rationing” (usually based on a car’s permit color or license plate number). Transportation experts strongly recommend the use of congestion pricing due to its efficacy and environmental benefits—so why do many cities choose to implement driving restrictions instead?
Equity concerns have been the biggest obstacle to the adoption of congestion-based pricing, which is seen as less fair to low-income drivers—and thus, less politically appealing—than a rationing system. Despite these concerns, existing evidence on the equity effects of congestion pricing has come only from developed countries, where even low-income individuals often own a car and drive to work. In a new RFF discussion paper, “Who Will Be Affected By A Congestion Pricing Scheme in Beijing?,” I work with my RFF colleague Joshua Linn and Lunyu Xie of Beijing’s Renmin University to examine the distributional consequences of a congestion pricing scheme currently under consideration in China, offering a glimpse into its effects on drivers in countries with developing economies. Our findings suggest that the burden of congestion pricing in Beijing would fall most heavily on wealthy and privileged drivers. Read More
Each week, I review the papers, studies, reports, and briefings posted over at the RFF Library Blog.
Colorado Oil and Gas Task Force Final Report
[AP] …[Governor] Hickenlooper spoke on the same day that his oil and gas task force submitted nine recommendations for easing tension created by the oil and gas industry in the state, often when wells are drilled near homes and schools… – via the Keystone Center for the Colorado Oil and Gas Task Force
Anthropogenic Warming has Increased Drought Risk in California
California is currently in the midst of a record-setting drought. The drought began in 2012 and now includes the lowest calendar-year and 12-mo precipitation, the highest annual temperature, and the most extreme drought indicators on record. The extremely warm and dry conditions have led to acute water shortages, groundwater overdraft, critically low streamflow, and enhanced wildfire risk. Analyzing historical climate observations from California, we find that precipitation deficits in California were more than twice as likely to yield drought years if they occurred when conditions were warm. We find that although there has not been a substantial change in the probability of either negative or moderately negative precipitation anomalies in recent decades, the occurrence of drought years has been greater in the past two decades than in the preceding century… - via Proceedings of the National Academy of Sciences by Noah S. Diffenbaugh, Daniel L. Swain and Danielle Touma
Double Impact: Why China Needs Coordinated Air Quality and Climate Strategies
[From Website] …this paper examines China’s current approach to tackling air pollution and carbon mitigation nationally and argues that more incentives are needed if China hopes to meet its “peak carbon” goal by 2030. – via Massachusetts Institute of Technology | Tsinghua University in Beijing / by Valerie J. Karplus
Delivering the Goods: Making the Most of North America’s Evolving Oil Infrastructure
[Oil and Gas Journal] The US crude oil renaissance has created strong demand for expanded US transportation systems, resulting in five primarily challenges, a recent Center for Strategic and International Studies report concluded. – via Center for Strategic and International Studies / by Frank A. Verrastro, Michelle Melton, Sarah O. Ladislaw, Lisa Hyland and Kevin Book
2014 Integrated Energy Policy Policy Update [Transforming California’s Transportation System to Meet Climate Goals]
[Green Car Congress] The California Energy Commission adopted its 2014 Integrated Energy Policy Report (IEPR) Update, which outlines, among many things, how the state is working to transform the transportation system to zero- and near-zero technologies and fuels to meet its climate and clean air goals. This report highlights the importance of incentives in helping speed this transition and specifically explores the role Assembly Bill 8, which makes more than $2 billion available for public investment, can play in helping to achieve this progress. - via California Energy Commission
Colorado Governor John Hickenlooper deserves some credit for creating the state’s Oil and Gas Task Force as a means of reducing the heat around the November ballot. In an effort to cool tensions among Colorado’s oil and gas industry, some local governments, and citizen groups, and as part of a deal to create the task force, a handful of controversial initiatives were withdrawn. Those included a requirement for a 2,000 foot setback from homes (currently 500 feet) and the addition a local environmental bill of rights to the state constitution. Industry-supported measures to withhold oil and gas revenues from communities that ban drilling and to require fiscal impact analysis on all initiatives were also pulled back.
After five months of deliberations, the stakeholder-based task force has issued 9 recommendations to address community concerns with shale gas and tight oil development in the state. Out of 36 recommendations voted on, 7 of the 9 issued were unanimous among the 21-member task force and 2 passed with the required two-thirds majority. Read More
In recent years, US climate plans have changed abruptly. In a new RFF discussion paper, with RFF Center Fellow Anthony Paul and Research Assistant Sophie Pan, we examine the challenges for progress—specifically, of coordination among jurisdictions—that presently face policymakers in both the United States and around the world.
The current centerpiece of US policy is the Obama administration’s Clean Power Plan, which would regulate greenhouse gas emissions from the power sector. Regulations are due this summer under the Clean Air Act that will establish a performance standard for emissions reductions—but that will leave states with significant flexibility for implementation, including the option of building regional cap-and-trade programs. This change in the US approach—away from cap and trade at a national level—mirrors, to a degree, shifts seen on the stage of international climate negotiations. There, observers see reason for optimism in the prospects for a bottom-up process to realize nationally determined reduction amounts.
Can this type of bottom-up approach meet the inevitable coordination challenges necessary to achieve an effective outcome? We looked at domestic data from the electricity industry and conclude that current design options can provide real opportunities to advance climate goals effectively—if states can learn new strategies and engage in coalition building. Read More
The recent history of China has been one of spectacular economic growth. The country’s GDP soared from 3.43 percent of global GDP in 2000 to 11.35 percent in 2012. Its per capita income of US$6,100 in 2012 puts China in the category of middle-income countries such as South Africa, Egypt, and Thailand.
At the same time, China has experienced very serious environmental degradation. Its energy consumption has increased rapidly, and it overtook the United States as the world’s largest energy consumer in 2010. Coal has been China’s dominant source of energy, accounting for 66.6 percent of the country’s total primary energy consumption in 2012. Given this heavy reliance on coal, China became the world’s largest carbon dioxide (CO2) emitter in 2006, and in 2012 it accounted for 29 percent of global CO2 emissions.
In addition, China’s air, water, and soil have been polluted to alarming degrees. Extreme air pollution in China, for example, is making international headlines, and this is not just anecdotal: In March 2014, China’s Ministry of Environmental Protection announced that only 3 of the 74 large Chinese cities it monitors met official standards for air quality in 2013.
The environmental situation is so dire that the country’s prior consensus of focusing on economic growth over environmental protection has broken down, spawning interest in the potential for green growth strategies for China. “Green growth” is a politically attractive term because it speaks simultaneously to two key challenges currently faced around the world: economic growth needed to improve the living standards of the world’s growing population, and measures needed to address the issues of environmental sustainability and climate change.
Sweeping energy and environmental policies—such as China’s enormous effort to decarbonize its energy system through increased reliance on wind and nuclear generation—are one crucial step toward a green growth path. But they will not succeed without the support of changes to the country’s institutional rewards system and governance structures, which until now have prioritized GDP growth over environmental protection.
The Relationship between GDP Growth and the Environment
Green growth is generally used to mean economic growth that is environmentally sustainable. Thus it carries with it the claim that environmental protection is, at a minimum, compatible with economic growth. When economists think about the relationship between GDP growth and the environment, they often point to the environmental Kuznets curve.
In this edition:
- Insight into the costs associated with operating nuclear utility fleets
- Commentary on the importance of studying climate modification techniques
Nuclear Fleet Costs
A bipartisan group of Illinois lawmakers, with the support of power company Exelon and others, recently rolled out legislation that would reward power generators “for producing environmentally friendly electricity.” Exelon said the initiative would allow nuclear plants in the state that are at risk of closing prematurely to “compete with other low-carbon power generators—including wind, solar, water, and clean coal” on equal footing. Read More