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Incentivizing the Reduction of Pollution at Dairies: How to Address Additionality When Multiple Environmental Credit Payments Are Combined

Anaerobic digesters (ADs) can reduce waste volumes and capture methane emissions from concentrated animal feeding operations (CAFOs), but their adoption rate is low because their cost is high relative to other forms of waste management. Farmers who use ADs can attempt to sell carbon credits and nutrient credits as well as renewable electricity certificates (RECs) generated by on-site electricity production from captured methane. These credits and RECs can be used as marketable “offsets” that buyers can use to help meet their greenhouse gas and nutrient pollution reduction goals. One issue that arises is whether a single operation can sell into multiple credit markets by “stacking” credits—that is, receiving multiple environmental payments to finance the conversion to AD technology. This practices introduces the possibility that some credits might be “non-additional”—i.e., produce no incremental pollution reductions and thus be suspect pollution offsets. Non-additionality in environmental credit stacking occurs when multiple payment streams do not produce incremental pollution reductions, thus allowing the credit buyer to pollute more than is being offset by the AD project. A possible solution to the stacking problem may be to allow stacking of all credits available at the time of AD installation, but to prohibit any further stacking if new credit streams become available after installation.

Authors: Brian C. Murray and Tibor Vegh

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Environmental Markets

Policy and Design

Agriculture

Land

Environmental Economics

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National

Working Papers

Environmental and Economic Implications of Regional Bioenergy Policy

The unique generation, landownership, and resource attributes of the southeastern United States make the region a ripe and important test bed for implementation of novel renewable energy policy. This policy brief describes the environmental and economic implications of one policy intervention: a hypothetical region-wide renewable portfolio standard (RPS) with separate biomass targets or “carve-outs.” A study of this intervention shows that over time the dominant contributor to such an RPS would be forest biomass and that existing resource conditions would influence patterns of biomass harvesting, resulting in a spatially and temporally diverse forest carbon response. Net forest carbon storage in the Southeast would be greater with the hypothetical RPS than without it in all but the final years of the modeled time period, but when displaced fossil fuel emissions are accounted for net greenhouse gas (GHG) reductions over the period could be substantial. The methods and findings presented here are also relevant to a broader array of policies that could increase biomass demand from the region, including pellet exports from the United States to the European Union and regulation of greenhouse gases under the Clean Air Act.

Authors: Christopher Galik, Robert C. Abt, Gregory Latta, and Tibor Vegh

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Climate & Energy

Bioenergy

Policy and Design

Southeast Climate

Environmental Economics

Energy Sector

Modeling

Policy Briefs

Exploring the Determinants of Emerging Bioenergy Market Participation

Individual biomass producers will play a strong role in the emergence of robust and sustainable bioenergy markets. Substantial, but fragmented research on what drives their participation exists. Through narrative review and network analysis, a new review of the bioenergy market participation literature in the journal Renewable and Sustainable Energy Reviews generates both an increased appreciation of how bioenergy market participation is assessed in existing research and how social network analysis may be further employed as a tool for literature review. The analysis reaches two central conclusions: 1) A variety of non-production objectives, structural and social constraints, and market-related attributes influence bioenergy market participation decisions, and 2) Assessment of these factors varies significantly across the literature for both user group and feedstock type. These findings collectively suggest that there may not be a single agreed-upon methodology for assessing bioenergy market participation. Furthermore, if the user group- and feedstock-specific differences found across the literature are indicative of fundamentally different socio-economic conditions in their respective markets, then policies specific to individual markets may be more effective in encouraging participation than uniform national policy initiatives. 

Author(s): Christopher S. Galik

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Climate & Energy

Bioenergy

Environmental Economics

National

Journal Articles

Enhancing Compliance Flexibility under the Clean Power Plan: A Common Elements Approach to Capturing Low-Cost Emissions Reductions

As states and stakeholders evaluate compliance options under the U.S. Environmental Protection Agency’s proposed Clean Power Plan, many recognize the potential economic benefits of market-based strategies. In some states, however, market approaches trigger administrative and political hurdles. A new policy brief by the Nicholas Institute for Environmental Policy Solutions offers a compliance pathway that allows states to realize the advantages of multistate and market-based solutions without mandating either strategy. With the common elements approach, states develop individual-state plans to achieve their unique emissions targets and give power plant owners the option to participate in cross-state emissions markets. Power plant owners can transfer low-cost emissions reductions between states whose compliance plans share common elements--credits defined the same way and mechanisms to protect against double counting. The common elements approach offers the following benefits: (1) allows cross-state credit transfers without states negotiating a formal regional trading scheme, (2) leaves compliance choices to power companies, (3) builds on existing state and federal trading programs, and (4) maintains the traditional roles of state energy and environmental regulators.

Author(s): Jonas Monast, Tim Profeta, Jeremy Tarr, and Brian Murray

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Climate & Energy

Clean Air Act

Policy and Design

State Utility Regulation

State Policy

Policy Briefs

Get the Science Right When Paying for Nature's Services

Payments for Ecosystem Services mechanisms leverage economic and social incentives to shape how people influence natural processes and achieve conservation and sustainability goals. Beneficiaries of nature's goods and services pay owners or stewards of ecosystems that produce those services, with payments contingent on service provision. Integrating scientific knowledge and methods into Payments for Ecosystem Services is critical. Yet many projects are based on weak scientific foundations, and effectiveness is rarely evaluated with the rigor necessary for scaling up and understanding the importance of these approaches as policy instruments and conservation tools. Part of the problem is the lack of simple, yet rigorous, scientific principles and guidelines to accommodate Payments for Ecosystem Services design and guide research and analyses that foster evaluations of effectiveness. The Nicholas Institute's Lydia Olander, along with other scientists and practitioners from government, nongovernment, academic, and finance institutions, propose a set of such guidelines and principles in a new Science article.

Author(s): S. Naeem, J. C. IngramA. VargaT. AgardyP. BartenG. BennettE. BloomgardenL. L. BremerP. BurkillM. CattauC. ChingM. ColbyD. C. CookR. CostanzaF. DeClerckC. FreundT. GartnerR. Goldman-BennerJ. GundersonD. JarrettA. P. KinzigA. KissA. KoontzP. KumarJ. R. LaskyM. MasozeraD. MeyersF. MilanoL. Naughton-TrevesE. NicholsL. OlanderP. OlmstedE. PergeC. PerringsS. PolaskyJ. PotentC. PragerF. QuétierK. RedfordK. SatersonG. ThoumiM. T. VargasS. VickermanW. WeisserD. WilkieS. Wunder

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Ecosystem Services

Environmental Economics

National

Journal Articles

Signed Peer Reviews as a Means to Improve Scholarly Publishing

In a new article in the Journal of Ocean and Coastal Economics, the Nicholas Institute for Environmental Policy Solution's Linwood Pendleton discusses peer review. Pendleton notes that peer review is necessary process with a long history of complaints, including over-solicitation of a small number of reviewers, delays, inadequate numbers of reviewers, and a lack of incentives to provide strong reviews or avoid reviews with little helpful information for the author. In the era of web-based distribution of research, through working paper or project reports, anonymous peer reviews are much less likely. The Journal of Ocean and Coastal Economics will use signed peer reviews and an open communication process among authors, reviewers, and editors. This approach, to be developed over time, should lead to stronger communication of research results for the journal's readers.

Author(s): Linwood Pendleton 

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Oceans & Coasts

Environmental Economics

Journal Articles

Vulnerability and Adaptation of U.S. Shellfisheries to Ocean Acidification

Ocean acidification is a global, long-term problem whose ultimate solution requires carbon dioxide reduction at a scope and scale that will take decades to accomplish successfully. A new perspective published in Nature Climate Change offers the first nationwide look at the vulnerability of our country’s $1 billion shellfish industry to the global, long-term problem of our oceans becoming more acidic due to the absorption of increasing amounts of carbon dioxide from the atmosphere. 

Author(s): Julia A. EkstromLisa SuatoniSarah R. CooleyLinwood H. PendletonGeorge G. WaldbusserJosh E. CinnerJessica RitterChris LangdonRuben van HooidonkDwight GledhillKatharine WellmanMichael W. BeckLuke M. Brander, Dan RittschofCarolyn DohertyPeter E. T. Edwards, and Rosimeiry Portela

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Climate & Energy

Oceans & Coasts

Journal Articles

Effect of Policies on Pellet Production and Forests in the U.S. South: A Technical Document Supporting the Forest Service Update of the 2010 RPA Assessment

Current policies in the European Union (EU) requiring renewable and low greenhouse gas-emitting energy are affecting wood products manufacturing and forests in the United States. These policies have led to increased U.S. pellet production and export to the EU, which has in turn affected U.S. forests and other wood products manufacturing. At this time, the primary exporting region in the United States is the South, and the primary importing countries in the EU are the United Kingdom, Belgium, and the Netherlands. The policies and some Member State subsidies are expected to continue in place until at least 2020, with the potential to continue beyond that date. Key drivers of U.S. pellet feedstock supply include both the age structure of current timber inventory and the policies that define sustainability. Also influencing the effect of increased demand for timber for pellets are the price-inelastic supply and demand. A simulation of the market responses to increases in both pellet and other bioenergy demand in the U.S. South suggests that prices will increase for timber as harvest increases, and will in turn lead to long-term changes in inventory and forest land area.

Authors: Karen Lee Abt, Robert C. Abt, Christopher S. Galik, and Kenneth E. Skog

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Bioenergy

Low Carbon Technologies

States & Regions

Reports

Stakeholder Experience with Voluntary Conservation Measures under the Endangered Species Act

On September 26, 2014, the Nicholas Institute for Environmental Policy Solutions at Duke University, with funding from the Oak Ridge Associated Universities consortium, convened a half-day meeting in Washington, D.C., at which representatives from private and federal organizations as well as leading ESA researchers discussed stakeholders’ experience with voluntary conservation measures under the Endangered Species Act, data gaps that preclude more widespread implementation of such activities, and research activities necessary to contribute new and vital information. The primary insights from the meeting are that experience with existing voluntary conservation tools under the Endangered Species Act provides a basis for the design of new approaches and that the design process requires a solid foundation of legal, institutional, economic, and empirical, field-based information.

Editor: Christopher Galik

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Proceedings

Implications of Clean Air Act Section 111(d) Compliance for North Carolina

Since the mid-2000s, North Carolina has increased natural gas generation, reduced coal dependence, established a renewable energy and energy-efficiency portfolio standard, and taken other actions that will assist it in meeting new carbon emissions targets under the U.S. Environmental Protection Agency’s proposed Clean Power Plan (CPP) promulgated under Clean Air Act (CAA) section 111(d). The CPP, as proposed, assigns state-specific emissions rate targets for existing fossil-fueled generators—targets adjusted for levels of renewable generation and energy efficiency measures. This analysis examines possible implications of meeting proposed CPP targets in North Carolina. To achieve those targets, North Carolina will increasingly shift from coal-fired to natural gas-fired electricity generation, incurring a modest rise in resource costs but creating a potentially significant revenue stream, which policy makers must decide how to allocate. Although the CPP will likely drive down overall emissions in North Carolina, the reductions are smaller than might be expected because North Carolina has already made headway in meeting its emissions targets and because new natural gas generation that is not covered under the 111(d) mass-based target will likely be a component of compliance. Alternative compliance measures, such as specific zero-carbon (e.g., nuclear and solar) investments and increased energy efficiency, reduce future natural gas dependence and hedge against natural gas price risk, though potentially at a cost higher than market-based compliance.

Authors: Etan Gumerman, David Hoppock, and Dennis Bartlett

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Climate & Energy

Clean Air Act

Policy and Design

Reports

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