In the News

In an ideal world, our nation’s energy markets would be unbiased—no one would get subsidies or tax breaks, and prices on air pollution would make sure that health and environmental costs were not externalized onto the public.

But that is not the world we live in today. Giveaways for oil and other fossil fuels, estimated to be on the order of $4 billion per year or more, distort the economics of how we power our homes, businesses and cars, often in ways that are not beneficial to the American public.

In his vision of an America transitioning away from fossil fuels, Jon Wellinghoff, the chairman of the Federal Energy Regulatory Commission, sees information technology as the basis for tremendous financial and employment opportunities. And with the right policies and incentives, this could happen soon. But in our current political reality, it feels like light years away.

Speaking on the future of American energy in the United States at Princeton recently, Wellinghoff got into the details of the technologies, many sitting on the shelf today, that could change individuals’ use of electricity and fuel — and would change some of how America does business for the better.

The BP disaster was a stark reminder of the risks involved in accessing America’s oil reserves. One year later, too little action has been taken by the government to prevent a similar incident.

While incorporating a “safety case” methodology into the laws and regulations governing offshore drilling may be helpful, a regulatory scheme that grants permission to drill too soon is fundamentally problematic. Even if an oil company were to identify all the risks of a drilling operation and implement safety plans to address them, the relatively less developed safety technology available today coupled with the more advanced (and more risky) drilling technology keeps the potential for disaster higher than necessary.

NYU Law School’s Institute for Policy Integrity has an important paper out today, explaining that the US is using a crazy system to determine whether to allow offshore oil drilling.

Under something known as the Revised Program Outer Continental Shelf Oil and Gas Leasing Program 2007-2012, the Bureau of Ocean Energy Management, Regulation and Enforcement does a very basic cost-benefit calculation when deciding whether or not to allow drilling in a certain spot: it looks at the costs, and then at the benefits, and then if the benefits outweigh the costs, it gives the go-ahead.

The U.S. Senate is debating a series of amendments to diminish or remove the Environmental Protection Agency’s ability to regulate greenhouse gases under the Clean Air Act. Regardless of the outcome there, the conservative assaults on the EPA’s ability to restrict climate-changing emissions are likely to continue, creating uncertainty for a host of other environmental rule-makings.

The American public enjoys tremendous economic benefits from environmental protections. Given this track record of responsible regulation, EPA deserves to have its power to be safeguarded, not stripped away.

Recently, certain members of the U.S. House and Senate have engaged in attempts to hijack measures like the small business reauthorization bill and the appropriations negotiations by attaching amendments and riders that gut EPA’s authority to control greenhouse gas emission. Polluters with distaste for the small rise in the cost of doing business associated with emissions controls have fought alongside certain politicians willing to skew or outright ignore scientific fact, to undermine EPA’s power to move forward with rules requiring emissions reductions.

“If it’s still on the books, there’s probably a reason for it,” says Michael Livermore, executive director of the Institute for Policy Integrity at New York University’s School of Law. He does allow that “there are a ton of regulations that could be made more efficient, where we could achieve the same goal at lower costs.”

“This is about elections. It’s about politics. It’s about using this issue as a metaphor to gain points in partisan politics,” said Michael Livermore, the executive director of the Institute for Policy Integrity, a non-partisan advocacy organization that focuses on governmental decision making, and an adjunct professor at New York University School of Law.

If the new analysis of the acid rain programs are any indication, there isn’t necessarily a tension between efficiency and fairness, said Michael Livermore, a law professor at New York University and executive director of the school’s Institute for Policy Integrity. That is promising for market-based efforts, but it is not a guarantee that future cap-and-trade systems will turn out the same way, he said.

“We don’t need to trust in our luck,” Livermore said. “We can design our programs to reduce the risk of hotspots.”

Thirty years ago, President Reagan put cost-benefit analysis at the heart of how agencies like the EPA and OSHA do business and initiated one of the most important recent developments in how the federal government works. In a 1981 executive order, Reagan instructed the Office of Information and Regulatory Affairs (OIRA), which is part of the White House Office of Management and Budget, to oversee all major agency regulations to make sure they met a cost-benefit standard. This move was heavily fought by protection oriented groups, like environmentalists, because they saw it as a backdoor for favoring industry at the expense of the public.