Tuesday, May 23, 2023

New damage curves and multimodel analysis suggest lower optimal temperature

Economic analyses of global climate change have been criticized for their poor representation of climate change damages. Here we develop and apply aggregate damage functions in three economic Integrated Assessment Models (IAMs) with different degrees of complexity. The damage functions encompass a wide but still incomplete set of climate change impacts based on physical impact models. [The authors] show that with medium estimates for damage functions, global damages are in the range of 10% to 12% of GDP by 2100 in a baseline scenario with 3 °C temperature change, and about 2% in a well-below 2 °C scenario. These damages are much higher than previous estimates in benefit-cost studies, resulting in optimal temperatures below 2 °C with central estimates of damages and discount rates. Moreover, [they] find a benefit-cost ratio of 1.5 to 3.9, even without considering damages that could not be accounted for, such as biodiversity losses, health and tipping points.
Fig. 1: Overview of the creation and use of the damage functions.

Fig. 2: End-of-century damages for the five macro-regions for two scenarios.

by Kaj-Ivar van der Wijst, Francesco Bosello, Shouro Dasgupta, Laurent Drouet, Johannes Emmerling, Andries Hof, Marian Leimbach, Ramiro Parrado, Franziska Piontek, Gabriele Standardi & Detlef van Vuuren 
Nature Climate Change https://www.nature.com Volume 13, Pages 434–441 (2023)

Sustainability transitions of contaminated sites: A global meta-analysis on economic effects of remediation behaviour

The worldwide diversity of contaminated sites, coupled with a scarcity of available land presents a challenge for urban spatial planning and, has led to an increasing political significance for brownfield conservation and reuse to achieve land resource sustainability. In this study, economic or the so-called ‘rebound effects’ of land regeneration are studied via a global meta-analysis on value fluctuation of surrounding property. To this end, a total of 91 observations from 28 HPM (hedonic pricing model) studies were synthesized to conduct a meta-analysis following a conditional random effects procedure. The empirical results indicate that, in line with expectations, the conservation and recycling of land resource indeed generate significant rebound in the implicit price of residential houses, especially for those located within 2 km of contaminated sites. Before land remediation and reuse, dwellings closest in distance to contaminated sites experience the greatest value loss. On average, the depreciation in property values within the first 1 km distance from a contaminated site is about 8.18%, significantly at the 1% level, while the corresponding adverse impact from 1 to 2 km distance is a 4.8% price premium significantly at the 5% level. The significance of the stigma or rebound effects depends on 12 attributes, in which, house age, location, floor area ratio (FAR), and central business district (CBD) variables have the largest impact of −37.38% to 37.5%. From a practical perspective, the findings of this meta-analysis: (1) help refine contributing parameters in HPM studies to evaluate environmental economics; and (2) provide meaningful decision-making support for cost-effective remediation and benefit maximization.
by Xiaonuo Li, Shiyi Yi, Andrew B. Cundy and Weiping Chen
Land Degradation & Development via Wiley Online https://onlinelibrary.wiley.com/journal/1099145x
Volume 33, Issue11; 15 July 2022; Pages 1775-1786

Monday, May 22, 2023

An Analysis of U.S. Multi-Family Housing, Eco-Certifications, & Walkability

This paper examines the persistence of differentiated pricing in the multi-family housing related to eco-certification. In examining a sample of market rents for non-specialty, multi-family properties both across the U.S., as well as those areas that enjoy the highest concentrations of LEED certified apartments, Jeremy Gabe, Karen McGrath, Spenser Robinson and Andrew Sanderford find rental premiums of 10.2% and 14.7%, respectively for those properties with LEED certification. The addition of the continuous Walk Score, to control for variations in urban form, results in premiums of 7.4% and 9.6%, respectively. These findings are directionally consistent with those found in earlier studies, and demonstrate a persistence in rental premiums for certified properties over time, and with increased LEED adoption.

by Jeremy Gabe,Karen McGrath,Spenser Robinson &Andrew Sanderford
Article: 2162515; Published online: 17 Jan 2023

EPA and State of New Jersey Propose Settlement with Bank of America for Monmouth County, NJ Superfund Site Cleanup

On May 15, 2023 the U.S. Environmental Protection Agency (EPA) announced a proposed settlement with Bank of America to address the White Swan Cleaners/Sun Cleaners Area Groundwater Contamination Superfund Site in Wall Township, Monmouth County, New Jersey. Under the proposed agreement, Bank of America, the current owner of the White Swan property, will be required to fund and perform vapor intrusion and groundwater cleanup work at an estimated cost of $29 million.

"With this settlement EPA is holding Bank of America accountable for its share of the cleanup at the White Swan site," said Regional Administrator Lisa F. Garcia. " After years of investigation and cleanup efforts, this is a significant step towards resolving the contamination issues at the site for the benefit of the community, the environment, and public health."

“The New Jersey Department of Environmental Protection and U.S. Environmental Protection Agency are committed to protecting the health of those who live and work in the vicinity of the White Swan Cleaners/Sun Cleaners site,” New Jersey Commissioner of Environmental Protection Shawn M. LaTourette said. “We have partnered together to test indoor air at hundreds of business and residential properties and installed ventilation systems on dozens with vapor intrusion concerns. This settlement with Bank of America ensures that long term cleanup, including remediation of contaminated groundwater and future vapor mitigation work, will be funded by the responsible party, not by the taxpayers.”

Bank of America became legally responsible for the site when it bought the White Swan property through a series of bank mergers and acquisitions in 2004.

Bank of America also will reimburse EPA for certain aspects of its cleanup work, paying $10.8 million, and pay up to $1.5 million for future EPA oversight costs. As part of the agreement, Bank of America will construct and then run the groundwater pump and treatment system for four years to capture and clean the most highly contaminated groundwater at the site.

The company will pay up to a total of $6.5 million to the State of New Jersey to settle its liability for cleanup and removal costs, to voluntarily resolve its liability for natural resource damages (NRD), and to address long-term operational needs of the treatment system. This amount includes $3.7 million for cleanup costs and $2.8 million set aside in an escrow account for any future groundwater system operation and maintenance or added vapor intrusion work needed after the State takes over the cleanup.

Vapor intrusion occurs when volatile organic compounds (VOCs) from contaminated soil and groundwater seep into buildings, potentially exposing occupants to harmful chemicals. EPA has found that the former dry-cleaning operations of White Swan Cleaners and Sun Cleaners were the sources of soil and groundwater contamination. VOCs from the contamination can easily evaporate into the air and cause health hazards. EPA added the site to the National Priorities List (NPL) in 2004. In the course of the cleanup, EPA and the New Jersey Department of Environmental Protection (NJDEP) have installed several indoor air ventilation systems after conducting indoor air testing on residential and commercial properties. In 2018, EPA also oversaw Bank of America’s removal of contaminated soil from the White Swan property. Cleanup of the Sun property, which is not related to the White Swan property, is being funded by EPA.


The proposed consent decree, which has been lodged in the U.S. Federal District Court of New Jersey, is subject to a 60-day comment period. The Department of Justice and EPA will evaluate the comments and decide whether to proceed and then, if appropriate, seek final approval by the court.

For more information, to view the proposed consent decree and to give comments, please visit: https://www.justice.gov/enrd/consent-decrees

The External Costs of Industrial Chemical Accidents: A Nationwide Property Value Study

Industrial chemical accidents involving fires, explosions, or toxic vapors impose external costs on nearby communities. We examine changes in residential property values using nationwide data on chemical facilities, accidents, and residential transactions within a spatial difference-in-differences framework. Dennis Guignet, Robin R. Jenkins, Christoph Nolte, and James Belke find that accidents with direct offsite impacts lower home values within 5.75 km by 2-3%, an effect that remains for at least 15 years. We estimate an average loss of $5,350 per home, which translates to a $39.5 billion loss to communities around the 661 facilities where an offsite impact accident occurred. They assess the assumptions needed for a formal welfare interpretation and conclude these results roughly approximate losses experienced by nearby residents.

Trichloroisocyanuric Acid Reaction, Decomposition and Toxic Gas Release at Bio-Lab, Inc.
Westlake, LA | August 27, 2020

by Dennis Guignet, Robin R. Jenkins, Christoph Nolte, and James Belke
U.S. Environmental Protection Agency (EPA) www.EPA.gov Environmental Economics Working Paper Series
Paper Number: 2023-01; Document Date: 02/2023

Evaluating Property Value Impacts from Water-Related 'Green Infrastructure': A Hedonic Modeling Approach

Over the past several decades, the rapid growth of Southwestern United States desert cities is creating significant climate and water scarcity challenges. City planners are using green infrastructure to mitigate these challenges and develop more livable, sustainable, and resilient communities. This study uses hedonic pricing modeling (HPM) to evaluate how constructed wastewater wetlands impact home values integrated into the project design. It compares Crystal Gardens in Avondale, AZ, consisting of 14 engineered wastewater filtering ponds, to nearby neighborhoods with desert landscaping. HPM revealed higher values for Crystal Gardens homes overall (7%) and significant increases for homes on the ponds (14%). Results demonstrate the economic value of integrating water-related infrastructure in desert cities for home sales. For a more accurate benefit assessment, additional research is needed on how the ecosystem services provided by these constructed wetlands contribute to greater property values.

by Jonathan Davis; Bjoern Hagen; Yousuf Mahid; David Pijawka
Journal of Green Building via Allen Press https://meridian.allenpress.com/jgb
Winter, 2023;  Volume 18, Issue 1, pages 3–16.

Sunday, May 21, 2023

Who Benefits from Hazardous Waste Cleanups? Evidence from the Housing Market

The Resource Conservation and Recovery Act (RCRA) manages cleanup of hazardous waste releases at over 3,500 sites across the US, which covers approximately 17.5% of all developed land in the country. This paper evaluates the national housing market impacts of cleanups performed under RCRA and estimates the program's impacts on neighborhood change. We find that cleanups near residential properties yield significant, yet localized, increases in home prices, and that impacts are concentrated in the lower deciles of the price distribution. Importantly, we find no evidence of sorting along socio-demographic dimensions in response to cleanup. Our findings suggest that cleanup benefits accrue to the residents who are the original “hosts” of pollution and could correct pre-existing disparities in exposure to land-based contamination.
This paper evaluates the housing market impacts of cleanups conducted under the Resource Conservation and Recovery Act (RCRA). We find that the positive environmental impacts from RCRA cleanups are reflected in the housing market, indicating that people are aware of cleanups and value the water quality improvements documented in Cassidy et al. (2020). The price increases that we find are driven by cleanups concentrated among the lowest price deciles of the census tract in which the RCRA facility is located: Prices increase by 11% for the 1st decile of the price distribution, and we detect no evidence of a price increase for the 9th decile. This indicates cleanups raise housing values of the poorest segments of the population, which are likely to face other disadvantageous circumstances in life and are typically more vulnerable to the deleterious effects of pollution (see, e.g. Apelberg, Buckley and White, 2005). 

Furthermore, we find that the benefits of cleanups accrued to those living closest to the sites and, notably, do not find that cleanups induced re-sorting. This is consistent with the localized price impacts that we find, but somewhat surprising given how expansive RCRA cleanups were and the recent literature that has highlighted the potential for policies to worsen underlying inequities (Hausman and Stolper, 2020; Bakkensen and Ma, 2020). Ultimately, whether environmental cleanups lead to neighborhood turnover is an empirical question that has far-reaching consequences for whether a policy would exacerbate pre-existing socio-economic disparities.

The Valley of the Drums, a toxic waste dump in northern Bullitt County, Kentucky

by Alecia W. Cassidy, Elaine L. Hill & Lala Ma
National Bureau of Economic Research (NBER) www.NBER.org
Working Paper 30661; Issue Date November 2022

Policies, Projections, and the Social Cost of Carbon: Results from the DICE-2023 Model

The present study examines the assumptions, modeling structure, and preliminary results of DICE-2023, the revised Dynamic Integrated Model of Climate and the Economy (DICE), updated to 2023. The revision contains major changes in the carbon and climate modules, the treatment of non-industrial greenhouse gases, discount rates, as well as updates on all the major components. The major changes are a significantly lower level of temperature of the cost-benefit optimal policy, a lower cost of reaching the 2° C target, an analysis of the impact of the Paris Accord, and a major increase in the estimated social cost of carbon.
Table 7 and Figure 7 show estimates of the social cost of carbon (SCC). The SCC in the baseline run is $61/tCO2 for the 2020 period (in 2019 international $). This is above the SCC for the C/B (Cost/Benefit) optimal run of $53/tCO2 because damages are smaller in the C/B optimum. It is far below the SCC for the 2 °C run of $85/tCO2. The higher SCC in the temperature-limited run reflects the economic interpretation that a tight temperature limit is equivalent to a damage function with a sharp kink at the temperature limit and therefore to a sharply higher damage function above 2 °C. Note that the estimates of the SCC in the current DICE version are significantly above those in earlier vintages for reasons discussed in other sections, see particularly the next section. 

One of the most instructive findings involves the importance of discounting for the SCC and other policies. Table 7 shows the powerful impact of discounting on the SCC. The social cost of carbon at a 5% discount rate is two-thirds of the DICE C/B optimal estimate for 2020, while that of a 1% discount rate is 8 times the DICE C/B optimal estimate for 2020.
Additionally, Figure 8 compares estimates of the SCC with several other current values. The GIVE model is a comprehensive estimate prepared by researchers at Resources for the Future using probabilistic estimates of output and other components of damage estimates (Rennert et al., 2022). It uses a relatively low discount rate and has a relatively high social cost of carbon. A second set of estimates pertains to the SCC used by the federal government and prepared by an interagency working group. Figure 8 shows draft SCC estimates from EPA (2022) for both their overall assessment and specific to a damage module based on the DSCIM model (Climate Impacts Lab, 2022) for near-term discount rates from 1.5% to 2.5%. Conditional on discounting assumptions, the EPA estimates align very closely with those of DICE-2023. Figure 8 also shows a draft update (OMB, 2021) based on earlier methods and models which did not contain recommended methodological updates. This estimate is notably lower than the corresponding value in DICE-2023. The key takeaway from Figure 8 is the importance of the discount rate in determining the SCC.

A major change in the results of the DICE model over the years has been the rising estimates of the social cost of carbon. The original DICE-1992 model did not calculate a SCC, which came later to climate-change economics. However, rerunning the baseline scenario for the 1992 model gives an estimate of $18/tCO2 compared to $61/tCO2 in the 2023 model (in 2019$). The upward revision is a notable illustration of the evolving scientific understanding of damages, discount rates, and levels of output. Further research will provide a decomposition of the sources of the change in SCC due to different components.

by Lint Barrage & William D. Nordhaus
National Bureau of Economic Research (NBER) www.NBER.org
Working Paper 31112; Issue Date: April, 2023

Friday, May 12, 2023

Air pollution and health impacts of oil & gas production in the United States

Oil and gas production is one of the largest emitters of methane, a potent greenhouse gas and a significant contributor of air pollution emissions. While research on methane emissions from oil and gas production has grown rapidly, there is comparatively limited information on the distribution of impacts of this sector on air quality and associated health impacts. Understanding the contribution of air quality and health impacts of oil and gas can be useful for designing mitigation strategies. Here we assess air quality and human health impacts associated with ozone, fine particulate matter, and nitrogen dioxide from the oil and gas sector in the US in 2016, and compare this impact with that of the associated methane emissions. We find that air pollution in 2016 from the oil and gas sector in the US resulted in 410 000 asthma exacerbations, 2200 new cases of childhood asthma and 7500 excess deaths, with $77 billion in total health impacts. NO2 was the highest contributor to health impacts (37%) followed by ozone (35%), and then PM2.5 (28%). When monetized, these air quality health impacts of oil and gas production exceeded estimated climate impact costs from methane leakage by a factor of 3. These impacts add to the total life cycle impacts of oil and gas, and represent potential additional health benefits of strategies that reduce consumption of oil and gas. Policies to reduce oil and gas production emissions will lead to additional and significant health benefits from co-pollutant reductions that are not currently quantified or monetized. 
by Jonathan J Buonocore5,1, Srinivas Reka2, Dongmei Yang2, Charles Chang2, Ananya Roy3, Tammy Thompson3, David Lyon3, Renee McVay3, Drew Michanowicz4 and Saravanan Arunachalam2
1 Boston University School of Public Health, Boston, MA, United States of America jjbuono@bu.edu
2 Institute for the Environment, University of North Carolina, Chapel Hill, NC, United States of America
3 Environmental Defense Fund, Washington, DC, United States of America
4 Physicians, Scientists, and Engineers for Healthy Energy, Oakland, CA, United States of America
Environmental Research: Health https://iopscience.iop.org/journal/2752-5309 via IPO Science https://iopscience.iop.org/
Volume 1, Number 2; Published 8 May 2023 

Thursday, May 11, 2023

Climate change and commercial real estate: Evidence from Hurricane Sandy

[Jawad M. Addoum, Piet Eichholtz, Eva Steiner and Erkan Yönder] study how professional investors capitalize flood risk in commercial real estate (CRE) markets after hurricane Sandy. [The authors] show that New York CRE exposed to flood risk trades at a large, persistent discount. CRE in Boston, which mostly escaped direct hurricane-related damage, also exhibits persistent price penalties. These price effects are driven by asset-level capitalization rates, not building occupancy. Results from a placebo test using real estate prices in Chicago show that our inferences are not driven by coincidental, unrelated price trends for waterfront real estate assets. [Their] results are consistent with professional investors responding to a persistent shift in the salience of flood risk post-Sandy, even in locations spared by the disaster.

Table 2 presents the output from Equation (4). Column (1) shows the price impact regression results for New York. The estimates suggest that, all else equal, a one-mile increase in coastal proximity is associated with 21.6% slower price appreciation. The authors present the results for Boston in column (2). The estimates suggest that a one-mile increase in coastal proximity is associated with 9.5% slower price appreciation. The economic magnitude of this effect is equivalent to about 40% of the effect [they] estimate in New York. Given the absence of physical damages in Boston, [Addoum, Eichholtz, Steiner and Yönder] attribute this portion of the effect to increased salience and perception of flood risk, and the remaining 60% of the New York effect to the economic fallout from physical damages sustained during Sandy.

by Jawad M. Addoum, Piet Eichholtz, Eva Steiner, Erkan Yönder
Real Estate Economics via Wiley
First published: 23 March 2023 
Open Access

Health, air pollution, and location choice

This paper provides evidence that air-pollution-related health conditions change how households evaluate clean air and, as a result, incentivize them to relocate to locations with better air quality. The evidence implies that naive estimations of the adverse effect of air pollution on health are biased, as people sort on air quality differently depending on their health. [The author employs] a spatial-equilibrium model in which households choose a county to live in based on county-level characteristics including air pollution. Using National Longitudinal Survey of Youth data, [the author creates] a panel tracking respondents’ respiratory health shocks and county-level location for over three decades. The estimates from a multinomial mixed logit model support the hypothesis that households move to cleaner-air locations after an adult is diagnosed with asthma. [Siyu Pan finds] that households react more strongly to an asthma diagnosis for an adult than to a child’s diagnosis. The estimated median increase in marginal willingness to pay for a one-unit reduction in Air Quality Index after a diagnosis of adult-onset asthma is $157–$830 (in constant 1982–84 dollars).
Air Quality by County

by Siyu Pan, Department of Economics, Georgia State University, 55 Park Place, Atlanta, GA 30302, United States of America and The W. A. Franke College of Business, Northern Arizona University, 
Journal of Environmental Economics and Management https://www.sciencedirect.com/journal/journal-of-environmental-economics-and-management via Elsevier Science Direct www.ScienceDirect.com
Volume 119; May, 2023; 102794, Available online 22 February 2023

India’s proposed Market-Based Economic Dispatch Mechanism Aims to Optimize Power Sector Resources

RMI analysis reveals potential daily savings of INR 1.5–4 crores per day across peak and off-peak seasons in Maharashtra and Tamil Nadu using the MBED mechanism.

RMI’s new report, Transforming India’s Electricity Markets: The Promises of Market-Based Economic Dispatch and the Path Forward, highlights key leverage points for successful implementation of wholesale market reforms that ensures long-term sustainable growth of the power sector in India.

The Indian power sector has evolved rapidly over the past decades, driving economic growth. Now, India has an opportunity to ensure electricity is procured reliably and efficiently, while paving the way for deployment of innovative and flexible power generation technologies. RMI emphasizes that India will need to reform existing wholesale markets to leapfrog toward increasing shares of renewable energy. This warrants a national impetus on resolving financial challenges in the distribution sector, including optimizing power sector resources to strengthen the country’s energy security.

The report outlines the Market-Based Economic Dispatch (MBED) mechanism, creating a shared understanding among stakeholders of the status and impact of proposed changes to India’s wholesale power market. The report provides a summary of the current market design in India, identifies the anticipated benefits of the MBED mechanism, and looks at key barriers toward implementation. It also shares lessons learned from international electricity markets and provides recommendations to successfully transition to the MBED mechanism in India’s power sector.

RMI’s analysis across two states demonstrates cost savings through the efficient dispatch of a pooled generator portfolio and finds potential system cost savings of INR 1.5–4 crore (US$184,000–US$491,000) per day over business-as-usual scenario.

MBED is a step toward creating a system that operates efficiently with an integrated pan-India approach for generators. The report demonstrates how India can ensure that the right electricity market operational structure is in place to develop a reliable, flexible, and cost-effective power sector. RMI Managing Director Clay Stranger said, “The MBED proposal is a key mechanism to optimize India’s power resources and it represents the next major opportunity to further India’s global leadership in advancing the innovative renewable energy sector.”

RMI www.RMI.org
Press Release dated March 1, 2023

Wednesday, May 10, 2023

The Value of Scattered Greenery in Urban Areas: A Hedonic Analysis in Japan

This study investigates the impact of scattered greenery (street trees and yard bushes), rather than cohesive greenery (parks and forests), on housing prices. The authors identify urban green space from high-resolution satellite images and combine these data with data on both condominium sales and rentals to estimate hedonic pricing models. They find that scattered urban greenery within 100 meters significantly increases housing prices, while more distant scattered greenery does not. Scattered greenery is highly valued near highways, and the prices of inexpensive and small for-sale and for-rent properties are less affected by scattered greenery. These results indicate that there is significant heterogeneity in urban greenery preferences by property characteristics and location. This heterogeneity in preferences for greenery could lead to environmental gentrification since the number of more expensive properties increases in areas with more green amenities.
Their results show that a 10% increase in scattered greenery within 100 m increases the price of apartments for sale by approximately 2 to 2.5% (from 740,000 to 930,000 JPY) when evaluated at average housing prices. 

Sander et al. (2010), who analyzed green space in Minnesota, reported that a 10% increase in the tree canopy within 100 m increased the average housing price by 0.48% and that the average tree canopy within 250 m increased the average price by 0.29%. Their estimated impact, which is larger than those in previous works, could be caused by the characteristics of the study area. Their study area has little green space, so the value of greenery could be high (Brander and Koetse 2011; Siriwardena et al. 2016). Additionally, trees and grasses that reduce noise and pollution might be highly valued due to the high population density and traffic in their study area (Perino et al. 2014; Votsis 2017). The authos provide a subsample analysis in the following sections and address the mechanisms underlying the results of these green assessments.

by Yuta Kuroda & Takeru Sugasawa
Environmental and Resource Economics  via Springerlink www.SpringerLink.com
Volume 85, Pages523–586 (2023)

New Vehicle Standards Will Produce Enormous Benefits for Consumers and the Climate

Updated pollution standards for cars and trucks will cut fuel costs and avoid up to a trillion dollars’ worth of climate-related damages

One April 13, 2023, the Environmental Protection Agency proposed new vehicle standards that will significantly reduce emissions of greenhouse gases and other criteria pollutants from the transportation sector. EPA’s multipollutant standards for light- and medium-duty vehicles sold in Model Years 2027 through 2032 will both reduce pollution and save consumers money—generating substantial societal benefits in the process.

Meredith Hankins, Senior Attorney at the Institute for Policy Integrity at NYU School of Law, issued the following statement: “EPA has a long history of using ambitious emission standards to protect public health, and today’s proposal adds to that history. The proposed standards for passenger vehicles are estimated to result in up to $1 trillion dollars in climate benefits, $280 billion in health benefits from reducing other pollution, and up to $770 billion in avoided fuel costs for consumers. This proposal, and the companion proposal for heavy-duty vehicles, recognize automotive manufacturers’ own commitments to electrify their fleets and build on Congressional incentives in the Inflation Reduction Act. EPA’s proposals represent an achievable path toward increasing the market-share of zero-emission vehicles.”

Relatedly, the Institute for Policy Integrity filed an Amicus Brief Defending NHTSA Corporate Average Fuel Economy Standards on April 4, 2023.  They noted that in May 2022, the National Highway Traffic Safety Administration (NHTSA) finalized a rule to increase its corporate average fuel economy (CAFE) standards for passenger cars and light trucks for model years 2024–2026. A group of fuel and petrochemical manufacturers and states challenged the standards in the U.S. Court of Appeals for the D.C. Circuit, arguing primarily that the Energy Policy and Conservation Act bars NHTSA from including electric vehicles in the analytical baseline for the new standards. Their amicus brief explains that longstanding administrative guidance and case law direct agencies to develop baselines that reflect their best assessment of the real world absent any new agency action. In the context of this rulemaking, that guidance and case law required NHTSA to project how many and what kinds of vehicles—including electric (and plug-in hybrid electric) vehicles—would be built and sold if it did not issue new CAFE standards, which is what NHTSA did here. Their amicus brief also explains that NHTSA has consistently prepared baselines for prior CAFE standards in this manner.

The Institute for Policy Integrity at New York University School of Law, a non-partisan think tank dedicated to improving the quality of government decisionmaking. The institute produces original scholarly research in the fields of economics, law, and regulatory policy; and advocates for reform before courts, legislatures, and executive agencies. https://policyintegrity.org
Press Release dated April 13, 2023
Also see
Multi-Pollutant Emissions Standards for Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles
A Proposed Rule by the Environmental Protection Agency on 05/05/2023
in the Federal Register

Regional Greenhouse Gas Initiative Would Lower Pennsylvania Emissions, Add to State Revenues, and Have Little to No Impact on Electricity Rates

A new report analyzes the expected impact on Pennsylvania emissions, power generation, revenue, and jobs, offering six central conclusions.  

In 2022, despite fierce opposition, Pennsylvania joined the Regional Greenhouse Gas Initiative (RGGI), a cap-and-trade program designed to reduce carbon emissions from Northeastern and Mid-Atlantic power plants. Ongoing lawsuits have so far prevented the program from going into effect. But what impact would RGGI have on Pennsylvania if the program passes muster?

Researchers at the Kleinman Center for Energy Policy at the University of Pennsylvania and Resources for the Future (RFF) joined forces to find out.  A new report released by the two institutions analyzes the expected impact on Pennsylvania emissions, power generation, revenue, and jobs, offering six central conclusions:  

Joining RGGI reduces Pennsylvania’s electricity sector emissions to 84 percent below 2020 levels in 2030. Without RGGI, the state’s electricity sector emissions would be 52-49 percent below 2020 levels in 2030.

Combined Economic Effects in Pennsylvania

Emissions reductions are achieved with small or negative changes in retail electricity prices. Low allowance prices translate into a small increase (1 percent) in Pennsylvania’s retail electricity prices in 2030 under an annual 3-percent declining emissions cap. When the cap declines to zero by 2040, retail prices see a small decrease (-0.6 percent).  

Joining RGGI decreases coal generation and increases renewable generation in Pennsylvania. Joining RGGI causes coal generation and—to a lesser extent—gas generation to fall in Pennsylvania. Wind and solar capacity and generation increase. 

Joining RGGI decreases Pennsylvania exports slightly, but the state remains a major regional electricity exporter across all scenarios. The increase in renewable generation is not as large as the decrease in fossil generation, leading to a reduction in exports.  

Pennsylvania gains substantial revenue from joining RGGI. While allowance prices are low in 2030 if Pennsylvania joins RGGI, the state still gains $101 to $148 million from the auction of emissions allowances in that year—much of it from allowances sold to generators in other states.

Joining RGGI is unlikely to impact overall employment in the state. Pennsylvania would have the opportunity to use some of the program revenue to benefit communities impacted by the phaseout of coal. 

The team used RFF’s Haiku electricity model to see what would happen if Pennsylvania joined—or did not join—RGGI under two emissions scenarios: one in which RGGI’s emissions “cap” falls 3 percent per year, and one in which the RGGI cap falls at 3 percent per year through 2026 and to zero in 2040.