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Potential Pathways: Future of the Electricity Sector in the Southeast—Workshop Summary, October 5, 2016, Durham, North Carolina

The electricity sector is rapidly changing due to the shale gas revolution, a precipitous decline in coal generation, steep declines in the cost of solar generation, the proliferation of smart grid technologies, and a suite of new environmental regulations. On October 5, 2016, Duke University’s Nicholas Institute for Environmental Policy Solutions and the Duke University Energy Initiative co-hosted a one-day workshop that brought together experts on the electricity sector in the Southeast—including representatives of electric utilities, other market participants, nonprofit organizations, and energy and environmental agencies—to discuss factors affecting the region’s electricity sector. The main topics were future demand uncertainty, the ways that technology innovation could affect business models and regulatory structures, and the role of nuclear energy in the Southeast’s electricity future. This proceedings describes the main ideas that emerged from the workshop. It concludes with issues ripe for future research.

Author: Danielle A. Arostegui

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Climate and Energy

Environmental Economics

Energy Sector

Proceedings

The Uncertain Future of Nuclear Power in the Southeast: Implications of an Aging Fleet for Electricity Sector Planning and Emissions

Nuclear power provides about one-quarter of the electricity in the Southeast and the majority of the region’s non-fossil generation. Beginning around 2030, nuclear plants in the Southeast, as in the rest of the country, will start to reach the end of their initial operating license extensions to 60 years, at which point they must receive an additional license extension or retire. How many nuclear units will seek and receive a second license extension is unknown. Replacing existing nuclear capacity with new nuclear capacity requires approximately 10 to 15 years. If a high percentage of nuclear units in the Southeast do retire at 60 years, it is unlikely that the units can simultaneously be replaced with new units given the long lead times and limited applications for new nuclear plants at the Nuclear Regulatory Commission. Given these circumstances, southeastern states may want to start planning for the potential loss of their largest carbon-free generation source now. This policy brief explores how the potential loss of existing nuclear power plants in the Southeast interacts with region’s other electricity sector challenges—among them, increasing natural gas dependence, demand uncertainty, and emerging technology—and it proposes steps states can take to address these challenges.

Authors: David Hoppock and Sarah Adair

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Climate and Energy

Environmental Economics

Energy Sector

Policy Briefs

Valuing Climate Damages: Updating Estimation of the Social Cost of Carbon Dioxide

To estimate the social cost of carbon dioxide for use in regulatory impact analyses, the federal government should use a new framework that would strengthen the scientific basis, provide greater transparency, and improve characterization of the uncertainties of the estimates, says a new report by the National Academies of Sciences, Engineering, and Medicine. The report also identifies a number of near- and longer-term improvements that should be made for calculating the social cost of carbon. The social cost of carbon (SC-CO2) is an estimate, in dollars, of the net damages incurred by society from a 1 metric ton increase in carbon dioxide emissions in a given year. The SC-CO2 is intended to be a comprehensive estimate of the net damages from carbon emissions—that is, the net costs and benefits associated with climate change impacts such as changes in net agricultural productivity, risks to human health, and damage from such events as floods.  As required by executive orders and a court ruling, government agencies use the SC-CO2 when analyzing the impacts of various regulations, including standards for vehicle emissions and fuel economy, regulation of emissions from power plants, and energy efficiency standards for appliances. 

Authors: Maureen L. Cropper, Richard G. Newell, Myles Allen, Maximilian Auffhammer, Chris E. Forest, Inez Y. Fung,  James K. Hammitt, Henry D. Jacoby, Robert E. Kopp, William Pizer, Steven K. Rose, Richard Schmalensee, and John P. Weyant

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Carbon Tax

Climate and Energy

Environmental Economics

Journal Articles

Revisiting the NAAQS Program for Regulating Greenhouse Gas Emissions under the Clean Air Act

The future is uncertain for the regulation of greenhouse gases from power plants, including the U.S. Environmental Protection Agency’s (EPA) Clean Power Plan, which covers existing plants. The rule is under review in the D.C. Circuit Court of Appeals, and the Supreme Court has indicated its interest in hearing the case. Moreover, during his presidential campaign, president-elect Donald Trump promised to “scrap” the Clean Power Plan. If the rule is overturned or is severely weakened, whether through litigation or executive action, stakeholders are likely to litigate to seek to force the EPA to use other authorities under the Clean Air Act to regulate greenhouse gas emissions.

This working paper examines the opportunities and challenges associated with regulation of greenhouse gases under the National Ambient Air Quality Standards (NAAQS) program, drawing a comparison with the Clean Power Plan’s approach under a different section of the Clean Air Act. The paper offers no opinion on the Clean Power Plan litigation, nor does it advocate for the Clean Power Plan or the NAAQS approach. Its focus is on understanding how the NAAQS program might incorporate greenhouse gases in in the event that the EPA pursues that approach.

Authors: Christina Reichert, Franz Litz, Jonas Monast, Tim Profeta, and Sarah Adair

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Climate and Energy

Clean Air Act

Environmental Economics

State Policy

Working Papers

The Challenge of Decarbonizing the U.S. Power Sector: Encouraging Innovation and Aligning Stakeholder Interests

Recent interest in and commitments to reduce greenhouse gas (GHG) emissions will require significant reductions of carbon dioxide (CO2) emissions from the U.S. power sector. Those reductions will in turn require a transformation in how electricity is produced, distributed, and consumed—a transformation possible only with intensive collaboration at all community scales, from local to state, regional, and national, and with attention to public, private, and government interests. Today’s decisions about this national investment will affect ratepayers, the environment, and the economy for many decades, making transparency, participation, and technical, financial, and regulatory coordination crucial to optimize benefits and minimize costs. This working paper describes current U.S. power sector trends and relevant environmental goals, ways that technology innovation could proceed or be interrupted, and three emerging low- and zero-carbon technologies generally considered leading options for meeting the decarbonization challenge. It concludes with ideas from a range of experts to meet GHG reduction goals and accelerate innovation to advance low-carbon generation. These ideas illustrate different perspectives on possible steps forward as well as the need for a venue or process for multiple stakeholders and experts involved in advanced energy technology, policy, investment, and implementation to collaborate in evaluating and prioritizing investments, policies, and broad efforts.

Authors: Etan Gumerman, Michelle Bergin, Jesse Way, Julie DeMeester, and Kerri Metz

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Climate and Energy

Environmental Economics

Energy Sector

Working Papers

Coral Reefs and People in a High CO2 World: Where Can Science Make a Difference to People?

Increasing levels of carbon dioxide in the atmosphere put shallow, warm-water coral reef ecosystems, and the people who depend upon them at risk from two key global environmental stresses: 1) elevated sea surface temperature that can cause coral bleaching and related mortality, and 2) ocean acidification. These rising CO2 levels may affect most of the world’s coral reefs and the populations which depend on them by 2050, according to a study the journal PLOS ONE. The study projects that countries in western Oceania would be amongst the first affected by CO2-driven coral reef stress, followed by Southeast Asian countries in the Coral Triangle such as Indonesia, which are highly dependent on coral reefs. Countries predicted to be most likely to experience severe ocean acidification are generally different from those predicted to experience the earliest onset of coral bleaching, with acidification projected to be worse for countries at the upper and lower latitudinal bounds of coral reef distribution such as Baja California (Mexico), Japan, China, and southern Australia. Unfortunately, many of the countries that are most dependent upon coral reefs are also the countries for which data are least robust, and the authors note that international and regional efforts will be needed to overcome obstacles to obtaining good data globally.

Authors: Linwood Pendleton, Adrien Comte, Chris Langdon, Julia A. Ekstrom, Sarah R. Cooley, Lisa Suatoni, Michael W. Beck, Luke M. Brander, Lauretta Burke, Josh E. Cinner, Carolyn Doherty, Peter E. T. Edwards, Dwight Gledhill, Li-Qing Jiang, Ruben J. van Hooidonk, Louise Teh, George G. Waldbusser, and Jessica Ritter

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Climate and Energy

Ocean and Coastal Policy

Ecosystem Services

Journal Articles

Ecosystem Service Concepts in Practice

Economists have long embraced the idea that services provided by nature have inherent economic value. Ecologists, other scientists, and many in the environmental advocacy community have more recently come to focus on the connection between natural systems and economic value. The broadening interest in the economic value of nature over the last two decades led to the emergence of the interrelated and now commonly used terms ecosystem services and natural capital. To inform Canadian policy, this article in a special issue of the journal Canadian Public Policy discusses some of the efforts that have been enacted elsewhere, with particular emphasis on those in the United States, and why some have been more successful than others.

Author: Brian C. Murray

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Climate and Energy

Ecosystem Services

Environmental Economics

Journal Articles

The Paris Agreement and Beyond: International Climate Change Policy Post 2020

While the Paris Agreement sets forth an innovative and potentially effective policy architecture, a great deal remains to be done to elaborate the accord—to formulate the many rules and guidelines required and to specify more precise means of implementation. Governments, other stakeholders, and researchers also need to think about constraints on the effectiveness of the Paris Agreement—and identify organizations and processes that could complement the Paris Agreement and the United Nations Framework Convention on Climate Change process more broadly. In July 2016, the Harvard Project on Climate Agreements hosted a research workshop at the Harvard Kennedy School, the purpose of which was to identify options for elaborating and implementing the Paris Agreement—and to identify policies and institutions that might complement or supplement the Paris-Agreement regime. Participants, which included Nicholas Institute researchers Brian Murray and Billy Pizer, subsequently prepared the briefs that are included in this volume, based largely on their presentations at the workshop, addressing opportunities for—and challenges to—elaborating, implementing, and complementing the Paris Agreement. 

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Climate and Energy

Environmental Economics

Reports

North American Climate Policy Forum: Exploring Cooperation between Canada, the U.S., and Mexico, June 22–23, 2016—Post-Conference Discussion and Summary Report

Canada, the United States, and Mexico have begun to recognize opportunities for harmonization on climate change policy as a way to decrease costs and increase the efficiency of actions to address climate change and to help all three countries achieve their greenhouse gas (GHG) emissions reduction goals pledged under the 2015 Paris Agreement. Although significant progress has been made at the sub-national level on climate policy innovation in North America, more work is needed to understand how increased coordination on climate change policies in North America could address concerns such as competitiveness, emissions leakage, and policy consistency in the region. To begin the conversation on the potential for and impacts of climate policy harmonization in North America, The University of Ottawa’s Sustainable Prosperity (now Smart Prosperity Institute) and Duke University organized the first annual North American Climate Policy (NACP) Forum, June 23-24, 2016, in Ottawa, Canada. The forum brought together prominent climate policy makers, business leaders, and researchers to discuss policy options to mitigate climate change and stimulate innovation for low-carbon technology solutions, to initiate conversation about whether climate goals and policies could and should be harmonized across the region, and to highlight the potential challenges and advantages of such harmonization ahead of the 2016 North American Leader’s Summit, also in Ottawa, where joint energy and climate change policy goals were announced by Prime Minister of Canada Justin Trudeau, President of the United States Barack Obama, and President of Mexico Enrique Peña Nieto. This report presents an overview of how existing regulatory approaches to climate change as well as recently announced joint emissions reduction targets lay the groundwork for climate policy harmonization. It then describes four issue areas that present potential opportunities and challenges for climate policy harmonization: alignment with trade policy, carbon pricing, clean innovation policy, and climate change adaptation policies. For each area, it reviews relevant insights from discussion at the forum, occasionally expanding on them by drawing on relevant literature. The report concludes with opportunities for future research that can further illuminate the issues raised at the conference and in the literature.

Authors: Emily Pechar, Mercedes Marcano, Acacia Paton-Young, Brian Murray, and Geoff McCarney

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Climate and Energy

Environmental Economics

Reports

Increasing Emissions Certainty under a Carbon Tax

To reduce greenhouse gas emissions, some groups have proposed that the United States consider use of a carbon tax. But whether the nation will achieve a specific emissions goal is uncertain because the economy’s response to such a tax is uncertain. Ultimately, there is an underlying tradeoff between certainty about emissions and certainty about prices and costs. To reduce uncertainty about whether a tax will achieve specific emissions goals, additional mitigation measures could be called on if emissions exceed those goals by a given amount. However, such additional measures introduce uncertainty about costs. At the extreme, a commitment to achieve emissions targets at all costs would imply that costs could be quite high. Discussions of policy mechanisms to increase price and cost certainty under several current cap-and-trade programs confronted this same dilemma: how much uncertainty about emissions outcomes is acceptable given reciprocal uncertainty about costs? Viewed through a slightly different lens, mechanisms that balance emissions and cost uncertainty can be viewed as a way to structure a more careful compromise between economic and environmental interests. This policy brief discusses mechanisms that could increase emissions certainty under a carbon tax. It draws from recent discussions between the authors and other policy experts, and its goal is to introduce ideas for further exploration. It begins with a discussion of how to measure emissions performance, or what it means to be achieving or not achieving an emissions goal. This performance would presumably provide the basis for pursuing remedial mechanisms. Next, the brief turns to a taxonomy of such mechanisms and the challenges and opportunities of each. It discusses ideas for initiating these mechanisms, either through some automated or discretionary procedure. The brief concludes with areas for additional research. The brief intentionally raises more questions than it answers—questions will be important to explore in ways that can provide guidance to policy decisions and design.

Authors: Brian Murray, William A. Pizer, and Christina Reichert

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Carbon Tax

Climate and Energy

Environmental Economics

Policy Briefs

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