Big Decisions: The Future of US Environmental and Energy Policy

Resources Radio is a weekly podcast launched in late 2018 and produced by the Resources editorial team and Resources for the Future (RFF). Guest hosts Richard G. Newell, president and CEO of RFF, and Susan F. Tierney, chair of RFF’s Board of Directors, sat in for a month-long spin-off series that we launched last fall. Throughout the series, Newell and Tierney talked with leading decisionmakers, analysts, researchers, and reporters about the big decisions that will impact US environmental and energy policy in the years to come.

Big Decisions in Air Quality Regulations

Richard G. Newell: How did addressing air pollution become your life's calling?

Mary D. Nichols: I moved to Los Angeles and found a job with a public interest law firm that was just getting started—because this was 1971, when the whole field just began. They had a grant from the Ford Foundation to work on environmental issues, and they had divvied up the issues. As the youngest—the kid—I got assigned to do air pollution. It was pretty obvious that air pollution was the number one environmental issue in Los Angeles.

At that point, there was essentially no body of law about air pollution at all, but the Clean Air Act had just been signed into law and was ready to be interpreted. It was, at that point, an amazingly concise and powerful piece of legislation. I got to figure out how to bring some of the first cases under that new statute, which is something that I think every young lawyer dreams of.

I had never fully appreciated how your career has really spanned the entire implementation of the Clean Air Act; that's amazing. Let's fast-forward to today, when we're facing a series of enormous problems: the pandemic, the country's racial reckoning, and of course the climate issue. Over the summer, you saw firsthand the devastating effects of wildfires in California. Do you see a clear path out of these predicaments? How related to each other are the solutions for all these major challenges?

The solutions are related—or, they need to be related.

I worked in the civil rights movement, and I saw that systemic racism (although we didn't call it that, then) clearly affected the futures and lives of whole segments of the population—and the legal system had something to do with creating those problems. I worked with others to try and create paths to divert people out of the system. When you layer environmental pollution on top of societal challenges, the effects are synergistic, not just additive.

This connection finally has been recognized in a broad way and is now part of the discussion about solutions. It has to be.

You've overseen some key cap-and-trade programs, such as the federal Acid Rain Program and California's own emissions trading programs. I know that California's landmark Global Warming Solutions Act of 2006, known as Assembly Bill 32 (AB 32), had scoping plans that described a major role for regulations and a relatively minor role for carbon pricing. But carbon pricing has grown over time, and I wonder whether you see a larger role for it in the future.

Governor Arnold Schwarzenegger, who signed AB 32 into law, wanted the legislation to be based on a cap-and-trade program. He was taken with the idea of market-based programs, and in fact, one of the reasons why he wanted me to come and run this program at the California Air Resources Board (CARB) was that he found out I’d been at the US Environmental Protection Agency when the Acid Rain Program went into effect. And that was the first—and at that point, the only—cap-and-trade program that had ever actually been fully implemented.

He was very excited about that, but the Democratic-controlled legislature was not at all excited about it. In the end, the legislation sent to his desk said simply that CARB could include a market-based program in the scoping plan if they made certain findings. But the governor was determined from day one to implement a market-based program; my job was to figure out how to get it in there without completely upsetting the legislature and while integrating it into a program that was based on regulation.

Of course, it's a bit of a misnomer to assume that a cap-and-trade program and regulations are completely opposed to each other—but they were presented as stark opposites. To this day, some groups that fought having a cap-and-trade program in the legislation still are not in favor of it—even though it's been operating successfully for a decade now; has raised revenue that's supported some very progressive programs in environmental justice communities; and has operated as a cap on emissions, as it was intended to.

Does an optimal balance exist for drawing down emissions? Should we seek a balance between carbon pricing and regulations?

We probably need a market program like cap and trade. We've included industrial sources and fuels, and we have a market-based program that applies to automotive fuel suppliers—the Low Carbon Fuel Standard—which is a separate regulation. We have an emissions standard for motor vehicles—which directly regulates the amount of greenhouse gases that vehicles can emit—and we have a bunch of other regulatory programs, including a requirement for carbon-free energy.

It's a complicated system, but these things interact with each other. I don't know that we've gotten it perfect, but at least we've been able to keep the whole thing together, reduce emissions, and do it in a way that not only has not hurt the California economy, but demonstrably has been beneficial.

AB 32 was only 13 pages long. I've even heard it compared to somebody jumping out of an airplane and designing their parachute on the way down. Yet, CARB has successfully enacted so many pathbreaking programs on the basis of that relatively brief legislation, it seems that establishing a careful process has been at least one of the keys to that success. Do you agree? How does CARB design and implement regulations, particularly given the complexities you’ve just laid out?

CARB is an interesting example of how you can combine a democratic process with a highly expert bureaucratic process.

The board itself comprises appointees of the governor who have to be confirmed by the legislature. Half of them are elected officials at the local level who serve on their local air pollution boards, and the others are filling special seats with special qualifications such as automotive engineer, physician, or attorney (in my case)—fields that were considered necessary for an effective air pollution control program.

After AB 32 passed, the board increased in size. We now have two legislative appointees who need to represent environmental justice communities or have experience dealing with environmental justice issues. We also have two legislators who serve ex officio and are liaisons to the legislature, because the legislature realized how important this program is and how difficult it would be for them to try to create the whole program themselves. They clearly were delegating a lot of power to this unelected body, and they wanted to make sure that they kept an eye on what we were doing and how we were doing it.

We had a history at CARB, going back to the 1970s, of doing things that were controversial in various communities at various times. History, experience, and expectation demand that you listen to the public and not just to the regulated community (although you have to listen to the regulated community, as well). We meet in open sessions, our hearings take as long as they need to, and everybody is invited.

When AB 32 passed, however, an additional layer of advisory committees was set up, including a committee of economists who evaluated the design of the cap-and-trade program, a technical advisory committee, and the environmental justice committee that I mentioned. We set up a website, and thousands of people from all over the state wrote in with ideas and suggestions about how California should address global warming. There was a huge amount of public interest in this program from the beginning. While we don't get quite that level of attention at our monthly meetings anymore, we get a lot of interest from all kinds of different groups around the state—people with ideas for how we can do things differently or better, and people criticizing the program either for not being strong enough or for being too strong.

We do our work in a very public setting. I think that makes the program more durable and more sustainable.

The word “rollback” perhaps has become the defining word of the Trump administration in relation to environmental policy. The New York Times has counted more than 100 environmental rules being reversed; many of those, including the reversal of vehicle emissions standards, are issues at the forefront of your work in California. In the event of a Biden administration, what would you say should be the immediate priorities at the US Environmental Protection Agency?

The standards currently in effect for conventional air pollutants and greenhouse gases are not good enough to get us where we need to go. If we assume that we should aim for a goal of carbon neutrality, then we may be able to prevent warming from reaching catastrophic levels. If that's the goal we’re willing to accept as a country, then we're going to have to move fast to make some big changes.

The plan that was adopted in the Obama administration—the Clean Power Plan—is not good enough. We're going to have to find ways to leapfrog over some of our current regulatory problems. I don't think we can do all or much of this without legislation, although there's a lot we can do. One thing we can do is with cars, trucks, and the transportation system: we can go back to the bargaining table with the automotive industry and come up with a way of coordinating on these regulatory programs going forward.

Just defaulting to where we were before Trump came into office is not going to be the right solution. I think we're going to have to find a way to continue making progress, which is very much like the framework agreement that we came up with in California, where five companies are negotiating a whole new set of standards that involve zero-emission vehicles by the middle of this century.

Can you say a little bit more about that and the recent announcement in California?

The governor recently signed several big executive orders relating to climate, but the one that I was most directly involved with deals with the transportation system. It will require that we move to zero emissions for new vehicles by 2035. The fleet as a whole has to turn over by 2045, and that's going to include trucks, tractors, and off-road vehicles. It's an exceedingly ambitious goal, which also will require huge public and private investments in the infrastructure for fueling all these new vehicles.

It's a goal that fits the size of the problem, but not only that—it also lays out an ambitious agenda that will give industry, city planners, and anybody thinking about transportation a path forward. It was greeted with excitement by many, but also with the sense (even by the auto industry) that we were on this path, anyway. The auto industry may not like having deadlines or state mandates for this, but they understand this is the direction the world needs to go, and it's what's going to be demanded of them.

How much of the executive order needs to be followed up by additional legislative action? Is it now in the hands of CARB to develop specific regulations? What else has to happen?

The executive order is aimed at executive agencies, so it directs CARB and our sister agencies to develop the regulations that actually implement the order. In a couple of places, the executive order also specifically invites the legislature to step up, adopt these goals, and add requirements, if they want to do that. This is particularly the case with respect to petroleum fuels in California, where because of existing legislation, the governor can’t require the oil and gas industry to stop using fracking techniques to produce fuel.

In general, these are things that could be done without legislation. But if we want to make it something that’s widely accepted and that the legislature wants to put its own stamp on, then the legislature will want to come and put their hands on it, as well.

We've talked about technology in the context of vehicles, but technology developments will be important more broadly in facilitating an energy transition and reducing emissions. What do you believe should be the role of environmental entrepreneurs and venture capital in the coming years? What levers are available to policymakers for supporting that kind of private sector innovation?

Environmental entrepreneurs have been key to the creation and implementation of our climate program, going back to the beginnings of the vehicle emissions standards and AB 32—both of which had significant support from Silicon Valley venture capitalists and entrepreneurs who care deeply about the problem of global warming, but who also saw an opportunity for California as a first mover, and for the businesses in which they’re directly involved.

Just to give one example of a well-known individual who participated in the development of this program: Tom Steyer is one of many people who believe the private sector needs to play a role in making sure these programs are created and delivered in a way that benefits the greatest number of people. As it’s turned out, California has attracted venture capital to a greater extent than any other state, in large part because of this program.

You have extraordinary depth and firsthand experience in crafting environmental law and policy. What are some of the big environmental decisions looming on the horizon that you think we aren't paying sufficient attention to right now, in either the public or private sector?

Gosh, there’s so many. I suppose I’d say the issue of global air pollution. In Los Angeles, pollution levels today are a tiny fraction of what they were 40 years ago. Meanwhile, other cities in China, India, Indonesia, and elsewhere are almost unlivable. The World Health Organization has declared air pollution as the biggest threat to people's lives.

We've got to get to some kind of global consensus about addressing these problems, and we need a sense of shared responsibility. The thing that’s made this so painful for me, as a person who has worked so long in this area, is watching how Donald Trump, his administration, and other leaders have turned things backward in terms of their willingness to address these issues that affect the health and well-being of their own people and the planet. And we’ve seen their response to the COVID-19 pandemic. We’ve seen these same things playing out, but in a much starker fashion, with people demonstrating for the right to not wear a mask or violently protesting against measures that protect not just their own health, but public health. The lack of a consensus around protecting public health, and the lack of trust in science, need to be addressed seriously. That's probably the biggest challenge I see.

Big Decisions in Data-Driven Policymaking

Susan Tierney: We've asked this of all our guests while hosting this special series on Resources Radio, and I'd like to turn the question around on you: How did you end up building a career in energy and the environment?

Richard G. Newell: In 1987, I was finishing my undergraduate work. At the time, I was doing a dual degree in materials engineering and philosophy, and I recognized that it wasn't where I wanted to spend the rest of my life; I was looking at different things and exploring.

That was around the time of something called the “Gar-barge,” which was a vessel full of garbage: the Mobro 4000. Some may remember that the barge sailed from Long Island and headed to North Carolina, where its garbage was supposed to be disposed of, but it was turned away. So, it headed down the East Coast of the United States and was denied entry into Mexican waters. It went as far as Belize before it came back, and its trash was eventually incinerated in a Brooklyn landfill.

I looked at this and other issues at the time—like acid rain and the ozone hole—and I thought, “This isn't just a technology issue. There's something else going on here.” There's the cost of the different options, politics, business, and policy that makes change happen. And I said, “That’s for me.” It's analytical, it's broad thinking, and it's really important to society. After that, I became more focused specifically on the economics of climate and energy policy, technology, and markets.

Sue, you've been involved on transition teams for a couple of presidential administrations and have held various roles within the federal government. Can you tell us something about those experiences?

Tierney: I was fortunate to co-lead, with Elgie Holstein, the Obama-Biden transition team at the Department of Energy. Based on that experience, I want to celebrate the peaceful and constructive transition of democratically elected leaders.

The transition from the George W. Bush administration to the Barack Obama–Joe Biden administration was, of course, a change in party, and I cannot say enough good words about the transition. It was a very complicated time; the economic crisis was real and deep. The Department of Energy staff did a great job of handing things off; it was extremely cooperative. I can't point to anything that seemed like angling, caginess, withholding of information, strategic sharing—nothing like that. It was great. That's what we deserve, and I got the privilege of operating in that kind of environment.

Now a question for you, Richard: I know that Resources for the Future (RFF), as a nonprofit organization, is very careful to not take positions in electoral races or legislative politics around specific proposed bills. Regardless of the outcome of this election, important research questions may be relevant for what's ahead in the next administration. Could you share some thoughts about what kinds of research questions RFF scholars will be exploring in the future?

Newell: Regardless of the election outcome, RFF will focus on two major areas where we think we can help improve environmental, energy, and natural resource decisions: The first is in designing smart emissions reduction strategies. The second is in confronting risk and building resilience.

Sue, you have experience in academia, in state and federal government, and in consulting with a wide variety of clients. I also know you're keenly aware of the value of including evidence-based information as part of the decisionmaking process by officials in legislative settings and administrative agencies. Can you comment on the difference it makes for federal and state decisionmakers to have access to sound economic and policy analysis?

Tierney: It's indispensable. I'm very familiar with the Regional Greenhouse Gas Initiative work that Dallas Burtraw, Karen Palmer, and other RFF colleagues have done for many years—from the beginning of its planning and design. I'm also very familiar with the analyses that Karen Palmer and Dan Shawhan have done on the carbon pricing mechanism in regional transmission organization markets. Matthew Wibbenmeyer's work on wildfires is going to be really important, as states like California consider what policies they’ll implement to address that increasingly awful climate impact.

Let me ask you the same question: Richard, you served as head of the Energy Information Administration (EIA), and even though it's not a policymaking agency, its work is important for providing data analysis and other information in the energy domain. What difference do you think it makes to have that kind of high-quality data and analysis?

Newell: It probably won't come as a surprise to you or anybody that I think having high-quality data and analysis is really important. EIA was created out of the energy crisis of the 1970s. At the time, the government realized it did not have the data and information it needed about the energy sector to make good decisions in response to the energy crisis. So, it created the EIA, vastly expanding the investment in data collection around the energy system so that good decisions could be made.

And RFF was created in 1952 for a quite similar reason. During the Truman-Eisenhower era, the country was heading into a period of rapid post-war economic expansion and was concerned about the availability of resources to support that growth, along with conservation and the environmental implications of resource use. If you look at RFF's early years, a lot of the work was just about data collection. Vast tomes were created at that time—actually predating the existence of the EIA—to provide good information and analysis.

I think all this is absolutely essential to inform good decisions by policymakers and the private sector. Ultimately, actions have consequences—and if you don't have good data and analysis, you have little idea of what those consequences might be. You need a good baseline picture of reality, and you need a solid understanding of how your actions might change that reality.

Tierney: Can you comment on any initiatives or policies from the federal government that you’re looking forward to hearing about or advancing in the next couple of years?

Newell: The big ones are about climate change and clean energy. My hope is for economy-wide action to address climate change. Ideally, that's through a broad-based price on carbon; and if not, it's through well-designed, flexible policies at the sector level that embrace a wide range of technological options and, I hope, harness the power of the marketplace.

We need to design public policies—for economic stimulus, infrastructure investment, and technology research and development—to advance both our economic well-being and environmental well-being. I think we can do that, but it'll take information and analysis to help steer what could be historically massive investments.

Another area, which we touched on earlier, is what I'd call “data for decisions.” We need much better information for the financial sector, communities, government, and businesses to confront climate risk and build resilience.

And I have to mention the importance of addressing the distributional impacts of energy and environmental policies on workers and communities. Equitable access to the benefits of environmental protection, the impacts of policies, and the effect of market and technology transitions on workers and communities are all important to understand. We need to do a better job of looking ahead as a country, foreseeing where these transitions are headed, and helping workers and communities prepare for that future.

Tierney: I'm pretty focused on that set of economic stimulus issues you’ve just described. Of course, I hope policies will address and accelerate action to mitigate the emissions related to climate change. But in the near term, given where we are in the economic crisis, I really hope that a clean energy and environmental economic stimulus package comes forward.

I'm also focused, like everybody else, on jobs, economic development, and positioning the economy for a low-carbon energy transition. We know there's a great multiplier effect for energy efficiency investments, and that’s a great job creator. Electrification of buildings, smart grid work, a conservation corps associated with tree planting, incentives for solar and wind, and electric vehicle charging are all good options to look forward to. Half the customers in the United States do not have advanced meters; we're going to need that in the energy transition. And I also would note the importance of economic assistance for communities that are going to be, or already are, affected by this energy transition.

Newell: Where things head, in terms of future stimulus response and investment, is going to depend on election outcomes, at least in part. Personally, I hope that we learn lessons—both positive and not so positive—from past experiences in which major investments are made in short periods of time. One of the things we're focused on at RFF is taking advantage of evidence and what we know from past experience about the best ways to deploy resources and help advance our decarbonization goals.

Regardless of what happens with all the big decisions that we’ll see in the coming months and years, RFF scholars will continue to apply our nonpartisan economic research to help inform good decisions related to energy, the environment, and natural resources.

Big Decisions in Federal Legislation

Amy Harder on how polarized politics shapes environmental policy: “Climate change has become so polarized over the last decade that policies intricately tied with climate change often run into political headwinds so much more than tangential issues like conservation and public lands, which was at the heart of the Great American Outdoors Act. … You still see Congress coming together to do big things in that respect.”

Big Decisions in Administrative Law

Jody Freeman acknowledges that climate change will intensify even after Trump leaves office: “More intense hurricanes, more intense fires, a longer fire season—all the things we’re experiencing are worse because of developments in the world of climate … Everything looks like it’s on fire for the new president, and I think it’s going to be very challenging to figure out what to do, and in what order. And remember: presidents don’t have much time before the midterms, so they've got to figure out what their priorities are.”

Jeffrey Holmstead believes Congress should lead on environmental policy: “I don’t think a conservative Supreme Court will be opposed to environmental regulation, and I think they’ll do their best to see that agencies implement the statutes consistent with congressional intent … but it will be clear that the courts are not the place [to deal] with solutions to climate change … [the US Environmental Protection Agency] can certainly do some things, but I think, ultimately, we should all be looking to Congress and hoping to come up with the kinds of solutions that can get enough votes to pass and be durable.”

Big Decisions in Equitable Energy Policy

Paula Glover on how the coronavirus pandemic underscores the importance of affordable energy: “Certainly in this post-COVID world, so many of us are at home. Imagine that person who doesn't have access to electricity, or that person who already has an energy burden who's now at home, or that person who doesn't have access to the internet and has children who are trying to do remote learning. I think the resource that [the American Association of Blacks in Energy] provides in terms of energy is more important to people day to day now than it ever has been, and … I'm incredibly concerned about what happens to those customers who have not been able to pay the bills for the last year.”