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:
After recent revisions to the process under the Trump administration, what will cost-benefit analysis look like in the future?
With President-Elect Joe Biden’s inauguration taking place on January 20, the Trump administration has been hurrying to finalize a variety of environmental rollbacks before the presidential transition. Some of these proposals would impact how cost-benefit analyses are conducted and the ability of the Biden administration to pursue its clean energy agenda. One proposed rule would make it harder to justify new regulations under the Clean Air Act, by seeking to limit the consideration of “co-benefits”—the indirect benefits of regulation, such as how limiting mercury emissions has the co-benefit of reducing particulate matter pollution. Another proposal—already critiqued by hundreds of thousands of public comments—could bar agencies from considering studies that rely on confidential data. While the US Environmental Protection Agency has claimed the rule is necessary to ensure that policy decisions rely on publicly available, transparent data, regulators assessing the public health–related co-benefits of proposed rules often critically depend on studies that shield personal health information. Such a limit could impede the ability of regulators to assess the benefits of proposed rules.
Cost-benefit analysis has been a standard component of federal rulemaking since the Reagan administration, but has been applied inconsistently in recent years. On a new episode of Resources Radio, Michael Livermore and Richard Revesz—law professors and coauthors of a new book about cost-benefit analysis—explore how the practice has shifted over time and what a Biden administration can do to update the process. Revesz contends that cost-benefit analysis methodologies should be modernized—by including a more robust consideration of “the impacts of regulation on disadvantaged, vulnerable, and marginalized groups,” for example. Livermore says that scientifically sound, empirically justified regulations should be a bipartisan priority going forward. “There's legitimate things to disagree about on regulatory policy and public policy,” Livermore says. “But folks across the spectrum generally agree that evidence, analysis, and expertise are valuable things that ought to have a place in our decisionmaking.” For more, stay tuned for an RFF event next month about the future of cost-benefit analysis.
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Fossil fuel companies are facing economic headwinds. How will communities that rely on fossil fuel jobs fare in the coming years, and how could public policy ease the transition to clean energy?
Major oil companies are turning to mergers and acquisitions to stay afloat, after laying off more than 100,000 workers in recent months and incurring billions of dollars in debt as a consequence of the coronavirus-fueled recession. The coal industry has been struggling as well, eliminating 10 percent of its workforce over recent years, even after the Trump administration relaxed regulations for coal plants that impact toxic waste and mercury emissions. If oil, gas, and coal companies have struggled under an administration that has pursued policies favorable to fossil fuel interests, then the prospect of a Biden presidency—which could prioritize clean energy, increase enforcement of environmental regulations, and halt pipeline construction—is a source of worry for workers and communities that rely on fossil fuel jobs. While Biden has endorsed efforts to support laid-off fossil fuel workers, uncertainty persists over which policies and programs the next administration could leverage to support those who would face challenges from a clean energy transition.
In a new report from an ongoing series in collaboration with the Environmental Defense Fund (EDF), RFF’s Molly Robertson and EDF’s Jake Higdon assess how public benefits programs can help support workers and communities as the country transitions away from fossil fuels. While more far-reaching policies eventually might be necessary to support fossil fuel communities, Robertson and Higdon contend that existing programs—from federal social safety net programs to more targeted, industry-specific benefits—can help in the near term. Because programs that have stringent eligibility criteria or that require states to opt in often restrict benefits, the authors emphasize that “policy that expands eligibility, access, and utilization of these programs is likely to contribute to fairness for workers in the transition to a clean economy.” For more, read an accompanying blog post from Robertson.
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How do tradable performance standards incentivize innovation in the transportation sector, and how could carbon pricing complement these goals?
California has long pursued ambitious policies around air pollution and the creeping threat of climate change. Its recent, headline-grabbing commitment to ban gas-powered vehicles by 2035 is just one component of a larger agenda to incentivize innovation in the transportation sector and reduce emissions. One initiative, the Low Carbon Fuel Standard, sets increasingly stringent requirements for the carbon intensity of alternative fuels, such as ethanol or renewable diesel, but allows companies to meet those requirements through whatever technologies are most cost-effective, and further allows companies that fail to meet standards to purchase credits from those that do. The state is aiming for its alternative fuels to have a carbon intensity 20 percent below 2010 levels by 2030, and the program recently notched a major milestone: the California Air Resources Board announced that the state’s portfolio of renewable natural gas–based fuels (which are produced by capturing methane from organic sources) were the first in the history of the program to achieve a negative carbon intensity.
California’s Low Carbon Fuel Standard is just one of many tradable performance standards—policies that set technological standards and leave it up to producers to decide how best to meet those standards—that currently impact the US transportation sector. A new working paper coauthored by RFF Senior Fellow Dallas Burtraw and University Fellow Thomas Sterner reviews existing tradable performance standards and compares them against carbon pricing policies. While tradable performance standards involve higher costs to reduce emissions than pollution pricing, they incentivize innovation and rarely inspire the type of political backlash common to carbon pricing efforts. Fortunately, though, the coauthors emphasize that tradable performance standards and carbon pricing are not incompatible and can drive deep decarbonization when employed together. “Combining a tradable performance standard with a carbon price may be necessary to drive innovation and achieve a sustained low-carbon transformation in the sector,” they write.
Related research and commentary: