Project Updates – Energy and Environment

  • Monday
    February 2nd,
    2015

    Policy Integrity Files Brief in Case Challenging EPA’s Clean Power Plan

    The U.S. Court of Appeals for the D.C. Circuit will soon hear the first set of cases challenging President Obama’s signature climate change initiative—the EPA’s Clean Power Plan. We recently filed an amicus brief for West Virginia v. EPA, one of the cases challenging the as-yet unfinalized regulation.

    The case focuses on whether the EPA has the authority to regulate greenhouse gases from power plants in the face of the uncertainty about the content of Clean Air Act section 111(d), due to the different House and Senate amendments to the provision passed in 1990.

    Our brief addresses two main points:

    • Ever since Section 111(d) was amended in 1990, the EPA has consistently, over 25 years and through administrations of both parties, interpreted the provision in ways that would support the agency’s ability to issue a flexible pollution regulation like the Clean Power Plan.
    • Petitioners’ reading of Section 111(d) could prevent the agency from using that section’s flexible compliance mechanisms, which could force the agency to use other command-and-control style regulations that impose higher costs.

    The brief can be found here.

    Oral argument will take place on April 16.

    Issue(s): Energy and Environment   Type: Amicus Briefs

  • Wednesday
    January 28th,
    2015

    Victory at Sea: New Offshore Leasing Program Begins to Adopt Policy Integrity Recommendations

    Policy Integrity’s multi-year effort to make the government account for “option value” in its natural resource leasing decisions has begun to pay off. In its new proposal for offshore oil and gas leasing from 2017-2022, the Department of the Interior’s Bureau of Ocean Energy Management (BOEM) devotes 12 pages to option value and related resource valuation concepts, which will now be considered in leasing decisions. Much of this language closely resembles the arguments Policy Integrity has made to the agency repeatedly since 2009.

    Policy Integrity has long argued that incomplete and flawed economic analysis leads the government to sell resource leases too quickly and too cheaply, potentially costing the American public hundreds of billions of dollars. We have suggested that government agencies engaged in leasing decisions should consider option value—a financial concept widely used in markets that places value on delaying irreversible decisions until more information is available. The language of BOEM’s proposed plan suggests that option value considerations could likely raise the minimum bids for lease sales and delay leasing in sensitive areas. However, BOEM has still failed to quantify option value, so Policy Integrity will continue to push for major improvements in the final plan.

    Our work on this issue began in 2009, when Policy Integrity sent comments to the Minerals Management Service (the precursor to BOEM at the Department of the Interior) requesting that the agency incorporate option value into its assessments of offshore drilling lease sales. Those comments later formed the basis for an article by Michael Livermore in the Colorado Law Review, “Patience is an Economic Virtue: Real Options, Natural Resources, and Offshore Oil.” Policy Integrity is also serving as counsel for the Center for Sustainable Economy in a lawsuit against BOEM. The case, Center for Sustainable Economy v. Jewell, focuses on BOEM’s 2012-2017 leasing plan for the Gulf of Mexico and the Alaskan coast. In September 2014, Michael Livermore represented the Center at oral argument before the U.S. Court of Appeals for the D.C. Circuit. A ruling is expected soon, and the case could have significant implications for all government natural resource leasing programs.

    Issue(s): Energy and Environment  

  • Friday
    December 19th,
    2014

    Energy Conservation Standards - Public Comments

    Policy Integrity has submitted comments to the Department of Energy, encouraging DOE to improve its economic justification for a proposed energy efficiency determination. DOE has determined that energy conservation standards for mercury vapor and metal halide high-­intensity discharge lamps are not “economically justified” as required by statute, even though such standards could save up to 1.6 quadrillion British thermal units of energy. By reducing electricity demand at and pollution from fossil fuel­-fired power plants, such energy savings would generate environmental and health benefits. However, at no point in DOE’s documentation does the agency discuss environmental and health benefits as part of its analysis of “economic justification” and “national impact.”

    The failure to consider these benefits is inconsistent with the agency’s practice in prior energy efficiency rulemakings. Given that the agency has a readily available methodology for quantifying and monetizing some of the key environmental and health benefits generated by energy savings, we suggest that the final determination should include such quantified benefits, whether or not they would change DOE’s final determination on whether the standards are cost-benefit justified.

    Our full comments are available here.

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    Issue(s): Energy and Environment   Type: Public Comments

  • Monday
    December 1st,
    2014

    EPA’s Clean Power Plan - Public Comments

    In Policy Integrity’s recently submitted public comments on the EPA’s Clean Power Plan, we make the case that the EPA’s flexible, cost-minimizing approach to setting performance standards for existing power plants is consistent with over 30 years of EPA Clean Air Act practice, under both Republican and Democratic administrations. While opponents of the Clean Power Plan have argued that the EPA is taking unprecedented and unwarranted steps to regulate carbon dioxide under the Clean Air Act, we show that the plan is deeply rooted in precedent.

    Our comments discuss the many historical antecedents to the elements of the plan that opponents have criticized: the EPA’s use of statewide limits on emissions rates when the statute refers to limits on sources; the fact that this rule could shift the balance of fuels used to produce electricity; the use of demand-side energy efficiency measures in analysis of how states can meet the requirements of the Act; the use of performance standards to existing sources that are regulated under hazardous air standards; and the accounting for co-benefits, such as the reductions in harmful particulate matter that will occur in tandem with greenhouse gas reductions, in the rule’s cost-benefit analysis.

    We also address why the EPA’s approach is preferable to a strict, technology-based standard, and suggest some ways in which the EPA could make the program even more efficient.

    Issue(s): Energy and Environment   Type: Public Comments

  • Tuesday
    October 7th,
    2014

    Public Comments on Net Metering in Wisconsin

    Wisconsin is one of more than 40 states with a “net metering” law that allows solar-powered households to sell some of the electricity they generate back into the grid for a fixed price. The Wisconsin Electric Power Company and Wisconsin Gas LLC recently proposed changes to their net metering rates, arguing in part that the rates force them to fund additional grid maintenance and modernization without appropriate compensation. However, the current rates also do not account for the climate and public health benefits from distributed solar generation.

    Policy Integrity submitted comments to the Public Service Commission of Wisconsin, arguing that both the positive and negative externalities of distributed solar generation should be considered when determining net metering rates. Specifically, we suggest that the Commission should:

    • Adjust the proposed net metering rate to include the health and environmental benefits
      associated with the avoided greenhouse gas (GHG) emissions and emissions of local
      pollutants;
    • Adjust the proposed net metering rate to include the value of the net impact of distributed
      solar generation on the local grid; and
    • Consider regulatory reforms to better achieve Wisconsin’s energy goals.

    The full comments are available here.

    Issue(s): Energy and Environment   Type: Public Comments