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RFF on the Issues: Clean Power Plan comments; Natural gas price drop

Clean Power Plan Comments

The US Environmental Protection Agency (EPA) has wrapped up a series of four hearings inviting oral comments on the Obama administration’s Clean Power Plan proposal, which is currently open for public comment until October 16. The agency has highlighted multi-state plans, target methodology, and their proposed “best system” to achieve emissions reductions as areas that would particularly benefit from public input.

In a recent blog post, RFF’s Anthony Paul and Sophie Pan break down the four “building block” components that together form EPA’s “best system” for meeting state carbon dioxideemissions targets. They note that calculating the emissions reductions that can be achieved under the blocks individually is important “in the case where some building blocks don’t survive legal challenge.” The authors conclude that block number two—involving shifts to natural gas—might offer the biggest potential emissions reductions.

Natural Gas Price Drop

Cool weather and increasing inventories have caused the price of natural gas futures to drop below $4 per million Btu, to its lowest seasonal price in 13 years, with both trends projected to continue over the next few months. These unusually low prices are also “prompting power plants to switch from coal,” even as output from natural gas generators continues to fall.

In a new discussion paper, RFF’s Joshua Linn, Lucija Muehlenbachs, and Yushuang Wang show how with lower natural gas prices, electricity prices and emissions fall—but not in lockstep. Muehlenbachs explains in a follow-up post: “When there is more switching, we see a smaller drop in the electricity price (because prices are set at the now-higher cost of coal-fired generation, not the falling cost of natural gas). But at the same time, with more switching, we see a larger drop in emissions. So, ultimately, the more that electricity consumers benefit from a price drop, the less we see environmental benefits.”

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.


Groundwater Depletion During Drought Threatens Future Water Security of the Colorado River Basin
[Green Car Congress] A new satellite study finds more than 75% of the water loss in the drought-stricken Colorado River Basin since late 2004 came from underground resources. The extent of groundwater loss may pose a greater threat to the water supply of the western United States than previously thought. This study is the first to quantify the amount that groundwater contributes to the water needs of western states. According to the US Bureau of Reclamation, the federal water management agency, the basin has been suffering from prolonged, severe drought since 2000 and has experienced the driest 14-year period in the last hundred years. The study has been accepted for publication in Geophysical Research Letters, a journal of the American Geophysical Union… – via Geophysical Research Letters

The Value of US Power Diversity: Diversity of United States Power Supply Could be Significantly Reduced in Coming Decades
Diversity in the US power supply—the most cost-effective means of managing the inherent risks in fuel costs and technology performance in generating power—could be dramatically reduced in coming decades. Fuel and technology decisions on new supply that will determine as much as one-third of US power supply will be required in the coming decades… – via IHS (free download with registration)

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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.


EPA’s Clean Power Plan: States’ Tools for Reducing Costs & Increasing Benefits to Consumers
[Press ReleaseStates are well positioned to implement the U.S. Environmental Protection Agency’s (EPA) recently proposed Clean Power Plan, according to a new report from Analysis Group. The report, funded by the Energy Foundation and the Merck Family Fund, was released at the National Association of Regulatory Utility Commissioners’ conference in Dallas. Analysis Group says the study is based on a careful analysis of states that already have experience regulating carbon pollution. It finds that those states’ economies have seen net increases in economic output and jobs… – via The Analysis Group for the Energy Foundation and the Merck Family Fund / by Paul Hibbard, et al.

Public Views on a Carbon Tax Depend on the Proposed Use of Revenue: New Report
[EcoWatch] While some U.S. are lukewarm on the idea of taxing fossil fuel companies for emitting carbon, more are willing to support a tax if the funds support cleaner energy. According to the University of Michigan and Muhlenberg College’s Spring 2014 National Surveys on Energy and Environment (NSEE), most Americans—56 percent—support a revenue-neutral carbon tax, in which all tax revenue would be returned to the public as a rebate check. However, that amount rises to 60 percent if revenues would be used to fund research and development for renewable energy programs… – via National Surveys on Energy and Environment

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The Impact of Natural Gas Prices on Electricity Consumers and the Environment

Pages from RFF-DP-14-19Coinciding with the recent increase in US natural gas production, the country has seen a 60 percent decrease in the price of natural gas. Lower natural gas prices have affected electricity prices and emissions rates differently across various regions. For example, during this time period, the Texas Reliability Entity experienced one of the largest decreases in the price of electricity but also one of the smallest decreases in the rate of emissions; whereas the ReliabilityFirst Corporation experienced one of the smallest decreases in the electricity price but one of the largest decreases in the emissions rate. Together with my coauthors, in a new RFF discussion paper, we theoretically and empirically explore the interrelated effects of lower natural gas prices on power plant operators, electricity consumers, and the environment, finding that lower electricity prices typically translate to less environmental benefits. Read More

The Federal Multiagency Collaboration on Unconventional Oil and Gas Research Strategy: What Have We Learned?

Multiagency_UOG_Research_StrategyThe Department of Energy, the Department of the Interior, and the Environmental Protection Agency recently released the long-awaited research strategy on unconventional oil and gas research. Its mandate was to produce timely, policy-relevant research questions that support sound policy decisions and prudent oil and gas development. It also was to “analyze and synthesize the state of knowledge.” While the strategy it provides poses broad natural and physical science questions, it omits many important areas and ignores the social sciences and research on current or future regulations and use of other tools. Time and again, we have seen major federal efforts follow this self-defeating, all hard science route—think the $500 million National Acid Precipitation Assessment Program. The fact is that there are numerous, policy-relevant social science research questions—many of them identified in our RFF report “The Natural Gas Revolution: Critical Questions for a Sustainable Energy Future”—that are vital to meeting this interagency mandate. Indeed, without answering these questions, (concerning, for example, the appropriate design of regulations and mix of liability and regulation, the appropriate allocation of regulatory authority among governments, public preferences for risk mitigation, and the public finance implications to local communities of such development),  the lessons from better “hard” science may be harder to internalize into policy.

This said, the Multiagency report contains some interesting ideas advanced in the hard science realm, including the following: Read More

Stimulating Shale Gas Development in China: What Lessons to Learn from the US Experience?

Pages from RFF-DP-14-18China’s pressing need to reduce coal consumption has created a strong demand for the natural gas trapped in its large shale reserves. The Chinese government has already experimented with a number of policies aimed at promoting shale gas development, but building an industry that can successfully utilize these reserves will be difficult. Although the Ministry of Land and Resources has estimated that China contains about 25.1 trillion cubic meters of recoverable gas, less than favorable geology and infrastructure will make drilling, extraction, and transportation much more challenging than in the United States.

Despite these differences, analyzing the US shale gas experience offers useful insights into how China could overcome the problems inherent in exploiting its hard-to-reach shale reserves. In a new RFF discussion paper, with coauthors Lei Tian and Xiaoli Liu of the Energy Research Institute in Beijing, we do just that. Much like the US experience, China will need to first lower costs through investments in drilling and other innovations in order to become profitable enough to encourage further capital investment. Once an initial innovation stage has produced cost-effective technologies, a second scaling-up stage can increase production to increase profitability and explore new plays. Read More

EPA’s Clean Power Plan: Breaking Down the Building Blocks

futureEmissionsChartFinal-JA2-02In the graph below, we explore two important aspects of EPA’s Clean Power Plan.

  1. EPA’s state targets for CO2 emissions reductions for existing power plants are in terms of emissions rates—mass of CO2 emissions per unit of electricity generation (lb/MWh). An alternative way to measure emissions reductions (and what matters) is mass terms alone (lb or tons), independent of electricity generation.  To examine this, we translate the rate targets into emissions reductions.
  2. The targets are composed of four building blocks and we show the reductions in these four components. The building blocks breakdown is meaningful because it shows emissions outcomes in the case where some building blocks don’t survive legal challenge.

EPA gives states the option to convert their rate targets to mass targets. Whether states adopt rate or mass targets will be consequential. An emissions rate alone doesn’t pin down how much carbon will be emitted; that depends on the amount of electricity produced during the compliance period (2020-2030). A high rate of economic growth would likely lead to increased power generation. High penetration of electric vehicles would also drive increased generation. More generation means more emissions are possible while still holding the emissions rate constant. Therefore, emissions from the power sector depend on the sector’s growth if the states adopt the rate targets proposed by EPA.

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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.


EPA’s Clean Power Plan: States’ Tools for Reducing Costs & Increasing Benefits to Consumers
[Press Release] States are well positioned to implement the U.S. Environmental Protection Agency’s (EPA) recently proposed Clean Power Plan, according to a new report from Analysis Group. The report, funded by the Energy Foundation and the Merck Family Fund, was released at the National Association of Regulatory Utility Commissioners’ conference in Dallas. Analysis Group says the study is based on a careful analysis of states that already have experience regulating carbon pollution. It finds that those states’ economies have seen net increases in economic output and jobs… – via The Analysis Group for the Energy Foundation and the Merck Family Fund / by Paul Hibbard, et al.

National Funding of Road Infrastructure
This report examines the funding of roads and highways in Australia, Brazil, Canada, China, England and Wales, France, Germany, Israel, Italy, Japan, Mexico, Netherlands, South Africa, and Sweden. It provides a description of the infrastructure in the jurisdiction, information on the ownership and responsibility of the roads, and taxes or other ways of collecting money to fund the nation’s infrastructure. If applicable, a discussion of reforms or new initiatives is examined… – via Law Library of Congress

Read More

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.


Clean Energy Services For All: Financing Universal Electrification
[Think Progress] Off-grid renewable energy is one of the cheapest, most effective ways to get electricity to the 1.3 billion people around the world who lack it, the Sierra Club argues in a new report. The report looked at how energy access can be delivered more cost-effectively to the people around the world that need it. The International Energy Agency (IEA) estimates that the world must invest $640 billion over 20 years to ensure global energy access, which is 300 to 500 percent higher than current energy access investments. But the Sierra Club argues that many essential energy services can be delivered more cheaply than the IEA estimates. According to the report, a $500 million investment in energy access will be needed over the next two to three years, and that investment will spur a clean energy services market for the poor valued at $12 billion annually... – via Sierra Club International Climate Program

Consequences of Climate Change Damages for Economic Growth: A Dynamic Quantitative Assessment
This report focuses on the effects of climate change impacts on economic growth. Simulations with the OECD’s dynamic global general equilibrium model ENV-Linkages assess the consequences of a selected number of climate change impacts in the various world regions at the macroeconomic and sectoral level. This is complemented with an assessment of very long-run implications, using the AD-RICE model. The analysis finds that the effect of climate change impacts on annual global GDP is projected to increase over time, leading to a global GDP loss of 0.7% to 2.5% by 2060 for the most likely equilibrium climate sensitivity range… – via OECD

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RFF on the Issues: Water recycling in California; Climate change risks

Water Recycling in California

A wastewater treatment plant in Northern California is offering free recycled sewer water to homeowners impacted by the region’s worsening drought conditions. Although recycled water was previously provided for industrial purposes, this is the first time that the plant is providing it directly to residents. More than 10,000 gallons were distributed during the first two weeks of the “innovative” and experimental plan.

In a new blog post, RFF’s Yusuke Kuwayama and Hannah Kamen of the University of Rochester explain that the “yuck factor” often associated with wastewater reuse may not be entirely justified. They note that Florida, a national leader in water reuse (along with California), “currently has no direct potable reuse systems and allocated only 14 percent of its total reused water to indirect potable use in 2013. . . . In fact, most recycled water goes to non-potable uses such as residential greywater, industrial cooling, and irrigation of crops, golf courses, and public access areas.”

Climate Change Risks

A recent Washington Post editorial argued that while scientists are still studying how and where climate change impacts will occur in the future, these uncertainties are “not excuses for doing nothing, or too little, to reduce carbon emissions.” The op-ed notes research results by the Risky Business initiative—which quantified threats such as increases in sea level, storm surges, and energy demand—as an example of data that “should—but probably won’t—snap Congress into action.”

At a recent RFF event, A Discussion of the Independent Risk Assessment for Risky Business: The Economic Risks of Climate Change, members of the Risky Business research team and other experts discussed the methods, data, and significance of the findings for decisionmakers seeking to mitigate future climate change impacts. Video of the event is now available.