Each week, we’re compiling the most relevant news stories from diverse sources online, connecting the latest environmental and energy economics research to global current events, real-time public discourse, and policy decisions. Here are some questions we’re asking and addressing with our research chops this week:
Given California's ongoing legal battle with the federal government, how viable are the state’s rigorous regulations on automakers?
This week, California Governor Gavin Newsom announced that the state would stop purchasing vehicles from automakers whose vehicle production standards align with the Trump administration’s decision in an ongoing fight over California’s legal authority to regulate tailpipe emissions. The conflict—rooted in the Trump administration's goal of rolling back Obama-era fuel economy standards, while California has moved to mandate stricter statewide standards—has now spiraled into a legal battle and antitrust inquiry involving the automakers that have chosen to comply with California’s more stringent requirements. California has historically struggled with air quality and, as such, has often adopted more stringent regulations on transportation than what the federal government has prescribed. One prominent example is the state’s 30-year-old Zero Emission Vehicles (ZEV) program, a unique policy that requires a portion of automakers’ sales in California to come from ZEVs such as electric vehicles.
RFF Senior Fellow Virginia McConnell and Fellow Benjamin Leard have published a new working paper this week that offers one of the first comprehensive reviews of the ZEV program. The authors assess the ways in which the ZEV program has succeeded, analyze the challenges it has faced, and offer suggestions to improve the program after recent changes have intensified its requirements. “With these new, stricter rules, it’s especially important for regulators to make the ZEV program as consistent and cost-effective as possible so that automakers can comply,” says McConnell. One key suggestion the authors make is to implement a backstop price, or what they term a “safety valve,” which could prevent manufacturers' costs from rising above a designated level—simultaneously addressing cost uncertainty and ensuring greater stability.
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Credit: Ralf Leineweber/Unsplash
What role will carbon pricing play in environmental policy around the world?
Two prominent heads of state have reasserted their commitment to carbon pricing in recent weeks, reflecting a growing global interest in adopting carbon pricing policies: Prime Minister Justin Trudeau of Canada, recently reelected to a second term, implemented a carbon pricing mechanism in his first term and soundly defeated his Conservative Party opponent, who pledged to repeal the carbon pricing scheme. Elsewhere, German Chancellor Angela Merkel has declared that climate change will be a priority for her final term in office. Already, her party has passed an array of environmental bills in the lower house, including a new fee system for carbon emissions. And while opposition parties have quibbled with the details of their environmental plans—with left-leaning parties in Canada still opposed to Trudeau’s plans to extend an oil pipeline, and German Green Party representatives still advocating for a more ambitious carbon pricing model—it is apparent that carbon pricing will be a central issue for the world’s leading economies in coming years.
“The Future of Carbon Pricing: Exploring the Latest Global Developments” convened carbon pricing experts this week at an RFF Live event to discuss carbon pricing bills in major economies around the world—specifically, China, Germany, and Canada. Céline Ramstein from the World Bank opened the event with a presentation on their “State and Trends of Carbon Pricing” report, which highlights the recent growth in carbon pricing policies worldwide, with 46 national and 31 subnational jurisdictions putting a price on carbon. And while recent headlines have focused on more established economies, Ramstein notes that “In the past year, we have [seen] a lot of interest in developing countries ... [there has been] development in Latin America, with a lot of countries moving toward implementation, like Chile and Colombia, and a lot happening in Asia—and happening pretty fast."
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Credit: Ralf Leineweber/Unsplash
How can major economies incorporate measures of environmental health, such as air pollution, into traditional assessments of economic growth?
Governments in India and China historically have struggled to maintain air quality amid rapid growth, and new reports suggest that their efforts to reduce PM2.5—particulate matter with a diameter less than 2.5 micrometers—have seen varying success. This week, for instance, schools in Delhi were closed for the second time in two weeks because of noxious concentrations of PM2.5. Meanwhile in China, a new report from the National Academy of Sciences found that fine particulate matter has decreased dramatically since China implemented new environmental standards in 2013. That year, in response to PM2.5 concentrations 40 times higher than the World Health Organization’s recommendations, China enforced stringent emissions standards for vehicles and replaced aging factories.
Both India and China are confronting a problem facing many of the world’s leading economies: how to manage industries that contribute to economic growth but simultaneously degrade the environment. Nicholas Z. Muller, a professor at Carnegie Mellon University, grappled with these ideas on this week’s episode of Resources Radio, discussing a recent paper he co-wrote that explores the possibility of incorporating the public health effects of air pollution into traditional economic metrics like gross domestic product (GDP). Muller’s application of green accounting points to a few key industries—agriculture, utilities, manufacturing, and transportation—as areas of opportunity for regulatory reform, as they make up less than 20 percent of America’s GDP, but contributed more than three-fourths of total air pollution damages between 2008 and 2014.
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