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The Clean Power Plan: Implications of Three Compliance Decisions for U.S. States

The proposed Clean Power Plan gives U.S. states flexibility in how they attain state-level carbon dioxide emissions rate goals from existing power plants. This analysis uses the Dynamic Integrated Economy/Energy/Emissions Model to illuminate the implications of three key decisions: whether to choose rate- or mass-based compliance, whether to pursue multistate or individual state compliance, and whether—if allowed in the final rule—to include new natural gas combined cycle (NGCC) units under the emissions limit. 

Regarding power sector adjustments, modeling shows that (1) a rate-based approach initially decreases coal generation 25% and increases use of existing NGCC units and construction of new renewables; (2) compared to that approach, a mass-based approach initially increases coal generation and removes incentives for use of existing NGCC and new renewables generation; (3) assumptions about renewables capital costs, energy efficiency savings, and natural gas prices significantly affect generation responses; and (4) rate-based approaches allow for more emissions growth than mass-based approaches post–2030.

Regarding policy costs, the modeling shows that (1) a mass-based approach, especially with multistate cooperation, offers large cost savings opportunities; (2) neither approach has a big effect on wholesale electricity prices, but including new NGCC units lowers prices under a rate-based approach and increases them under a mass-based approach; and (3) costs differ across U.S. regions and across the mass- and rate-based approaches within regions.

Authors: Martin T. Ross, Brian C. Murray, and David Hoppock

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Climate & Energy

Clean Air Act

Policy and Design

Environmental Economics

Energy Sector

National

Working Papers

Assessing Impacts of the Clean Power Plan on Southeast States

The proposed Clean Power Plan gives U.S. states flexibility in how they attain state-level carbon dioxide emissions rate goals from existing power plants. This analysis explores the potential impact of the proposed CPP on Southeast states across a range of compliance options relative to a baseline without the CPP. The analysis presents modeling results from the Dynamic Integrated Economy/Energy/Emissions Model for eight primary compliance scenarios involving rate-based or mass-based compliance, unilateral state action or regional cooperation, and inclusion or non-inclusion of natural gas combined cycle (NGCC) units as regulated entities under the CPP.

Regarding electricity sector adjustments, the modeling shows that a rate-based approach initially decreases coal generation, encourages use of existing and construction of new NGCC units, and incentivizes renewable generation, although use of renewables is not cost-effective in the Southeast under baseline cost assumptions. By comparison, a mass-based approach initially increases coal generation and removes incentives for use of existing NGCC units while significantly increasing new NGCC generation. Including new NGCC units under CPP compliance shifts generation from those units to existing NGCC units under mass-based compliance and increases coal generation under rate-based compliance.

Regarding policy costs, the modeling shows that individual state compliance costs vary considerably, that a mass-based approach initially entails half the costs of a rate-based approach, and that both regional rate-based and mass-based approaches create significant net cost savings over unilateral state compliance.

Authors: Martin T. Ross, Brian C. Murray, and David Hoppock

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Climate & Energy

Clean Air Act

Policy and Design

Southeast Climate

State Utility Regulation

Environmental Economics

Climate Change Policy

Energy Sector

Modeling

Working Papers

Lessons Learned from an Ecosystem-Based Management Approach to Restoration of a California Estuary

Ecosystem-based management (EBM) is the dominant paradigm, at least in theory, for coastal resource management. However, there are still relatively few case studies illustrating thorough application of principles of EBM by stakeholders and decision makers. This Marine Policy article details work done at Elkhorn Slough, a California estuary. There, stakeholders collaboratively developed and evaluated large-scale restoration alternatives designed to decrease two types of rapid habitat change occurring in the estuary, erosion of channels and dieback of salt marsh. In the end, decision makers rejected large-scale alternatives altering the mouth of the estuary, and instead opted for small- to medium-scale restoration projects and recommended an added emphasis on reduction of nutrient-loading. The article describes seven challenges encountered during the application of EBM principles.

Author(s): Kerstin Wasson, Becky Suarez, Antonia Akhavan, Erin McCarthy, Judith Kildow, Kenneth S. Johnson, Monique C. Fountain, Andrea Woolfolk, Mark Silberstein, Linwood Pendleton, and Dave Feliz

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Science

Oceans & Coasts

Estuaries

Journal Articles

Evaluating the Basic Elements of Transparency of Regional Fisheries Management Organizations

A new study in the journal Marine Policy examines, for the first time, the transparency of international fisheries management organisations operating on the high seas. Transparency is broadly recognized as an essential component of sustainable development and good governance, especially with regard to the management of natural resources. In order to develop a more secure investment environment and provide the public with knowledge of natural resource rents received by their governments, terrestrially-based standards such as the Extractive Industries Transparency Initiative have been established to ensure greater fiscal transparency. The results that emerged from the study are mixed, highlighting a number of good and also weak practices. 

Author(s): Nichola A. Clark, Jeff A. Ardron, and Linwood H. Pendleton

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Oceans & Coasts

Fisheries

National

Journal Articles

Reservoir Sedimentation and Storage Capacity in the United States: Management Needs for the 21st Century

The United States federal government invested significant resources to build dams in the mid-twentieth century to increase water storage capacity nationwide; while only 5% of the dams in the United States are federally owned, they account for 61% of the total national storage capacity. Society is increasingly dependent on reservoir storage capacity due to increased water demand, increased population growth on floodplains protected by flood control dams, or increased demand on hydropower as a critical part of the electricity grid. Simultaneously, reservoir sedimentation diminishes storage capacity. Thus, there is a persistent chronic loss of the very resource upon which many aspects of modern society depend. Not measuring, assessing, and managing this resource undervalues it, and also perpetuates ignorance of threats to existing beneficiaries as well as obscuring opportunities for additional benefits. In order to most efficiently use the nation’s increasingly scarce reservoir storage capacity, the authors propose three modest actions for the hydraulic engineering community in the Journal of Hydraulic Engineering: expand nationwide reservoir sedementation surveys, supplement RESSED with initial planned sedimentation rates, and share responsibility for building reservoir sedimentation knowledge. 

Author(s): Charles Podolak, Martin Doyle

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Water

National

States & Regions

Journal Articles

Regulating Existing Power Plants under the U.S. Clean Air Act: Present and Future Consequences of Key Design Choices

In June 2014, the U.S. Environmental Protection Agency (EPA) released its proposed rules to regulate carbon dioxide emissions from existing fossil fuel power plants, triggering considerable debate on the proposal’s design and its environmental and economic consequences. One question not addressed by this debate is this: What if the EPA regulations turn out to be inadequate to address future mitigation goals? That is, what will the landscape for future policies look like if these regulations turn out to be just an interim measure? This analysis in the journal Energy Policy compares potential short- and long-term consequences of several key regulatory design choices, including mass-based versus rate-based standards, tradable versus non-tradable standards, and differentiated versus single standards. It finds that long-term consequences may be significant in terms of the legacy they leave for future policy revisions: tradable standards lead to lower electricity prices and become weaker over time; differentiated tradable standards lead to relatively greater investment in coal retrofits; non-tradable standards lead to relatively greater retirement of coal capacity. It may be the case that key policy choices entail one set of tradeoffs if proposed EPA rules are viewed as relatively permanent and final and another set of tradeoffs if the rules are viewed as an interim solution.

Author(s): Brian Murray, William Pizer, Martin Ross

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Climate & Energy

Clean Air Act

Policy and Design

Environmental Economics

Climate Change Policy

National

Journal Articles

Exploring Biomass Market Participation and Decision Making

Individual biomass producers will play a large role in the emergence of robust and sustainable bioenergy markets. Despite recognition of producer differences, there are few comparative studies of what actually contributes to bioenergy market participation decisions across different producer groups. This policy brief, which draws on research descibed in Exploring the Determinants of Emerging Bioenergy Market Participation, addresses this gap and compiles lessons from the existing body of work on the factors that influence producer decision making. The literature finds that many non-production objectives, structural and social constraints, and market-related attributes can influence bioenergy market participation decisions—in particular, asset specificity, or the market or end-use flexibility of a given feedstock. A quantitative analysis highlights those independent and dependent variables most often found to be significantly associated—information that can improve representation of bioenergy market participation decision making in future modeling efforts. A social network analysis sheds light on the hypothesis that there exists in the literature a differential treatment of feedstock production decision making across feedstock categories, producer groups, and geographic regions. The finding of potential differences is confirmed through QAP regression analysis for two feedstock types (residues and commodities) and one producer type (woodland owners). If producer group- and feedstock-specific differences are indicative of fundamentally different socio-economic conditions in their respective markets, policies targeted to individual markets may be more effective than uniform national policies. Targeted policies could reflect location-specific feedstock production techniques, non-production objectives, and other attributes related to market participation decisions. Furthermore, this analysis revels that a greater number of factors are associated with dedicated feedstock production decisions than with residues or traditional commodity feedstock production decisions. It follows that policies seeking to increase production of dedicated feedstocks should consider a broader array of tools, approaches, or incentives than those seeking to increase production of residues or traditional commodities.

Author: Christopher S. Galik

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Climate & Energy

Bioenergy

Regional Bioenergy

Policy and Design

National

Policy Briefs

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

Energy Sector

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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Bioenergy

Regional Bioenergy

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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Bioenergy

Regional Bioenergy

Journal Articles

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