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:
As the clean energy industry confronts financial headwinds from the coronavirus pandemic, are federal programs successfully incentivizing the deployment of carbon capture technologies?
Even as the clean energy industry faces mounting job losses, the Department of Energy has failed to disburse about $43 billion in loans to clean energy projects. The bulk of that money comes from the Title XVII loan program, which supports projects that reduce or sequester greenhouse gas emissions, and which has not financed any projects since 2016. Meanwhile, another federal program to facilitate the deployment of carbon capture, utilization, and storage (CCUS) technologies is confronting the opposite challenge: concerns that the program distributed money excessively. Last week, a watchdog report concluded that $893 million in tax credits under the 45Q program, which incentivizes carbon capture projects, were claimed over the last decade, but without the recipients proving per EPA rules that carbon dioxide was actually sequestered. After Congress expanded the 45Q program in 2018, the Internal Revenue Service has been finalizing new guidance and grappling with calls for a stricter oversight regime.
Concerns about feasibility and affordability have long hindered efforts to expand CCUS technology. But on a new episode of the Resources Radio podcast, Julio Friedmann—a senior research scholar at Columbia University’s Center for Global Energy Policy and a former Department of Energy administrator—contends that anxieties about the viability of CCUS do not stand up to scrutiny. Even as funding questions dog domestic programs, Friedmann claims that the progress the world has made on CCUS justify its further expansion. “We now have 20 projects operating around the world today,” he argues. “We really can do this globally and are doing this globally.” A new explainer elaborates on the subject, outlining how carbon capture technologies work and why barriers such as high costs and uncertain levels of public support present persistently vexing challenges.
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Credit: Chris Hill/Shutterstock
How is the coronavirus pandemic impacting the political feasibility of carbon pricing policies, at home and abroad?
Due to a rapid increase in federal spending in response to the coronavirus pandemic—along with declining revenues since the enactment of tax reform legislation in 2017—US debt is expected to exceed GDP this year for the first time since World War II. This budget shortfall poses challenges for lawmakers heeding calls from businesses and Americans for more stimulus money, especially with Majority Leader Mitch McConnell warning about the perils of “extraordinary” national debt. But to some policy analysts, these budget quandaries present a rare opportunity to mobilize support for carbon pricing, which would help reduce emissions while bringing in new revenue. Their optimism comes despite backlash against existing carbon pricing regimes across the world. Multiple provinces are suing the Canadian government over a federal carbon tax they claim imposes unfair costs on consumers. And in Ireland, a group of lawmakers are refusing to join a governing coalition unless rural communities are exempt from environmental measures such as the proposed carbon tax increase.
Such concerns are often leveraged against carbon pricing policy, which—by raising the costs of energy and other goods—purportedly imposes the largest burdens on those least able to pay. And the coronavirus pandemic has only heightened concerns that carbon pricing is too regressive a policy to consider, especially during an era of economic hardship. But as a new explainer makes clear, the distributional impacts of carbon pricing policies depend on how the policies are implemented. Importantly, RFF’s Dallas Burtraw, Maya Domeshek, and Amelia Keyes argue that “the most substantial factor that drives variation between households is the use of revenues.” In particular, returning revenues to households as part of a “dividend” could help ensure that low-income communities are not burdened by efforts to reduce emissions, especially if dividends are treated as taxable income or only distributed to households below a certain income level. For more, read this explainer (and others) in RFF’s ongoing explainer series.
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Credit: Rihaij/Pixabay
With the GOP reviving its Trillion Trees push, what policies could be leveraged to expand forest bioenergy across the country?
Even amid the coronavirus pandemic, protecting and expanding forests is reemerging as a prominent concern for the Trump administration. The US Environmental Protection Agency is planning to classify biomass as “carbon neutral” by the summer—similar to the European Union, where forest bioenergy has expanded to become the continent’s main source of renewable energy. And following President Trump’s initial interest in joining the World Economic Forum’s Trillion Tree Initiative earlier this year, Representative Bruce Westerman has released a revised version of the Trillion Trees Act, part of an emerging effort among Republicans to address climate change. The updated bill, which has stalled as many Democrats demand more sweeping climate action and congressional leaders of both parties prioritize responses to the coronavirus, now includes incentives for homebuilders to use low-carbon building materials.
In a new issue brief and accompanying blog post, RFF Nonresident Senior Fellow David N. Wear reflects on the significance of the recent Trillion Trees push and the urgent need for policies that address losses in forest area across the country. In the blog post, Wear acknowledges that planting more trees is not sufficient to address the scope of our climate challenges, but contends that the global initiative and the domestic legislation both importantly consider “expand[ing] the forest carbon sink as a climate change mitigation measure.” And, as Wear elaborates in the issue brief, the optimal way to encourage forest expansion is through policy and regulatory choices that address the currently modest market demand for more forests. History provides a guide: from 1982 to 2012, national forest inventories grew as private investments facilitated expansion.
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