Climate Compass Blog
I will be the first to admit that I don’t really understand the California election process. Governors are recalled and propositions seem to proliferate at every election cycle. What I do understand is that these propositions can have dramatic consequences—after all, elections do matter. Most folks who are reading our blog have likely heard of Prop 23, which would effectively stop the implementation of California’s landmark climate change law, AB32. Environmental groups, clean energy entrepreneurs and big names such as Bill Gates and James Cameron have poured large amounts of attention and $25 million into the “No on 23” campaign, even as refiners Valero and Tesoro—and the now infamous Koch Brothers—fund the Yes campaign. Luckily the opponents have been getting the upper hand recently, with polls saying just over 50% of likely voters plan to vote against the prop—including both gubernatorial candidates.
On September 23, the California Air Resources Board (CARB) announced the adoption of ambitious, though aspirational, greenhouse gas (GHG) emission reduction targets associated with the total miles traveled by California drivers. This is the latest step in the process of implementing Senate Bill 375, signed by Governor Schwarzenegger in 2008. The significant increase in stringency of the CARB target levels over recommendations made by Metropolitan Planning Organizations (MPOs) last May was surprising and although praised by some, has received significant criticism.
The law provides incentives, not mandates, for MPOs to use regional transportation strategies that encourage smart growth. Incentives for MPOs, which meet the GHG targets, can include easier access to federal funding and exemption from certain environmental review requirements. Although called ‘precedent setting’ by the media, it establishes growth policies considered similar to others that have already been implemented in California, and this law would not have a strong impact without stringent GHG reduction targets. SB 375 required CARB to set the targets, giving it the power to determine how seriously MPOs would have to invest in new development plans if they wish to take advantage of the incentives. Using 2005 as a baseline, the GHG emissions per capita reduction targets set by CARB for 2020 and 2035 were, respectively:
|Region||2020 Target||2035 Target|
|San Diego Area||7%||13%|
|Bay Area Region||7%||15%|
|San Joaquin Valley (to be revisited in 2012)||5%||10%|
|Targets for the remaining six MPOs making up 5 percent of the population match or improve upon their current plans for 2020 and 2035|
The targets CARB defined were more ambitious than what the largest MPOs recommended in May. For example, recommendations for the Bay Area were 5 percent per capita for 2020 and 5 percent for 2035 (the same to account for projected population growth, which would make higher targets more difficult to achieve in 2035). Critics complained that these targets were “hijacked” by environmentalists, as CARB did not provide an explanation for the increase.
While more stringent targets are a victory for champions of climate change policy, some Californians have claimed CARB’s numbers as irresponsible because MPOs cannot afford to implement the plans needed to meet the targets. Given the state’s budget deficit and lingering impacts from the global economic recession in 2008 and 2009, budget crises for transit agencies have resulted in decreased service and increased fares. To combat expected costs, CARB has promised to help seek out more state and federal funding, although CARB member and San Diego County Supervisor Ron Roberts is pessimistic about their chances. Business groups angrily predict that such funding will have to come from increased transportation taxes such as vehicle miles traveled fees, parking fees, and congestion pricing. Critics (Example 1, Example 2) also cite the prediction by the Metropolitan Transportation Commission (MTC) of San Francisco that gas would reach a cost of $9.07 per gallon if there were a carbon or ‘vehicle miles traveled’ (VMT) tax.
CARB could address these concerns by clarifying the rationale for its decision and exposing half-truths propagated by some of its critics. For example, whether or not targets are too ambitious, SB 375 requires CARB to review them regularly and consider revisions based on economic and demographic conditions, as well as actual results achieved. The critics’ references to the MTC’s $9.07 per gallon gas are disingenuous warnings. The MTC’s gas price forecast is actually for 2035, not the immediate future, and the MTC considers a carbon or VMT tax as just one of multiple policy options. Only when this tax is added to the MTC’s unlikely forecast of gas prices (a linear extrapolation based on gas prices in 2008, the highest price ever, hitting $7.47 per gallon by 2035) does the cost of one gallon reach $9.07 in 2035. This forecast is significantly different from that of the U.S. Energy Information Administration, which, as of 2010, expects a national average of $3.91 per gallon gas in 2035. In addition, sustainable development experts Calthorpe Associates’ ‘Vision California’ study highlights attainable smart growth savings for Californians that would provide a significant boost to the economy. It quantifies savings, potentially achievable through SB 375, at $6,400 per year per household by 2050, among other significant opportunities.
While it is natural to be wary of the ambitious goals, California has previously defied naysayers and achieved ambitious policy goals at lower costs than initially predicted, as happened with Title 24 building energy efficiency standards in 1978. Furthermore, it is worth noting that SB 375 will remain intact no matter the fate of Proposition 23, which seeks to suspend the Global Warming Solutions Act, Assembly Bill 32, in the upcoming elections. By providing incentive-based aggressive targets, MPOs now have greater reason to invest significantly in future transportation and land use plans. With such an investment, Californians can look forward to a more comfortable life with shorter commutes, reduced air pollution, and long-term economic growth.
Sam Wurzelmann is the Innovative Solutions intern
Steve Seidel, vice president for policy analysis, co-wrote this post.
With the failure of the Senate to act on climate change legislation, the focus of attention now shifts to possible regulatory actions by EPA. The Supreme Court in 2007 made it clear that greenhouse gases (GHGs) are pollutants under the existing Clean Air Act (CAA), and the overwhelming scientific evidence (spelled out in great detail in the endangerment finding) demonstrates that such pollutants represent possible harm to public health and welfare.
Opposition to EPA action rests in part on concerns that any regulations will be excessively costly and burdensome to households and U.S. manufacturers. While it is certainly true that regulating GHGs will result in costs, it is also important to look at whether the economic benefits from those regulations will be greater than the costs they impose. In other words, will societal costs of allowing global GHG emissions to continue unabated (costs that will come in the form of impacts from rising sea levels, increased extreme weather including heat waves and droughts, among others) be greater than the costs of regulating those emissions responsibly?
This basic regulatory framework – that regulatory costs should be less than the resulting benefits – is codified in OMB review of all major federal regulations by both Republican and Democratic Administrations, has historically been applied to all EPA regulations, and would certainly be applied to any future regulations of GHGs.
So what have been the costs and benefits of past EPA regulations under the CAA historically? Congress required EPA to undertake a retrospective assessment of the costs and benefits of regulations under this statute. The conclusion of this retrospective review is that the CAA resulted in total benefits that are around $37 trillion, while total costs were $0.874 trillion (in 2010 dollars) – an astounding 40 to 1 benefit to cost ratio!
EPA has also produced a prospective assessment of the costs and benefits of the CAA – this time for the time period of 1990 through 2010. In this review, EPA estimated that the most likely benefit to cost ratio of the CAA for this period is 4 to 1. While a very strong and positive value, the ratio is substantially lower than the estimated benefits for the first 20 years of the CAA.
This is not unexpected – early gains are usually greater, and more cost effective, because simple or cheap remedies are the first to be applied in response to regulatory requirements. As those requirements become more stringent, creating additional benefits becomes more costly (from an economics perspective this is described as moving up the marginal cost curve).
How credible is EPA’s assessment of its regulations? Alan Krupnick, formerly of the President’s Council of Economic Advisors, has testified before Congress about the credibility of EPA’s analyses: “Under the auspices of the agency’s Science Advisory Board, both studies were scrutinized throughout the decade-long preparation by at least three expert committees of outside economists, air quality modelers, epidemiologists, and other health experts.”
In addition to these EPA assessments, there have been a handful of quality external analyses of the costs and benefits of the CAA. The Office of Management and Budget (OMB) found that the “major rules” from EPA’s Office of Air resulted in total benefits between $145 and $218 billion annually, for the years between 1992 and 2002. This is compared to costs of between $22 and $25 billion over that same period. A study by researchers at MIT found total annual benefits rising from $50 billion in 1975 to $400 billion in 2000. This report accounts for the monetary benefits of avoided premature death differently than the EPA studies, and as a result reports lower values for the total benefits. A sum of the total discounted benefits yields a total benefit of $6.85 trillion from 1975 through 2000 – a figure still substantially greater than the EPA estimate for the costs of the regulations.
So how might this play out in terms of future regulations of GHGs? EPA’s first GHG regulations were standards set for light duty vehicles (which it coordinated with the efficiency standards set by NHTSA). These standards are expected to lead to net benefits of between $0.5 and 1.2 billion dollars (discounted back to present values using 7 percent and 3 percent discount rates, respectively) without even including a social cost of carbon. If a value is assigned to the avoided GHG emissions associated with this regulation, the net present benefits are even greater!
If there is a lesson that can be drawn from these previous regulatory efforts it is that while regulations do impose real costs, EPA’s actions under the CAA have consistently led to positive environmental and economic outcomes. By not regulating, we would have foregone these positive net benefits and incurred the social costs imposed by unabated pollution.
So the next time someone tells you that the costs of reducing air pollution are too high, ask them what would be the costs to society of not reducing those emissions.
Russell Meyer is the Senior Fellow for Economics and Policy. Steve Seidel is Vice President for Policy Analysis.
We’ve been tracking federal government efforts towards reducing our vulnerability and increasing our resiliency in the face of the potential impacts and risks from climate change. I continue to be impressed by the steps that many federal agencies are taking in this regard—a lot of work is going on to mainstream climate change adaptation.
Yesterday the Interagency Climate Change Adaptation Task Force released its report to the President. During the past year this task force—which includes about 20 different Federal agencies—worked on developing recommendations and guiding principles on a strategic approach to climate change adaptation. The Task Force’s recommendations include: making sure that adaptation is a standard part of Agency planning (mainstreaming!), ensuring information about the impacts of climate change is accessible, and aligning federal efforts that cut across agency jurisdictions and missions.
A number of agencies have already gotten started on this. Two agencies within the Department of the Interior (DOI) released climate change strategies last month—the Fish and Wildlife Service and the National Park Service. These efforts build on DOI’s overarching strategic response to climate change.
The Fish and Wildlife Service manages more than 150 million acres of wildlife refuges across the United States and has additional responsibilities related to the protection of fish populations, endangered species, and migratory birds. (Interesting side note: according to the Service, about 41 million people visit national wildlife refuges each year and their spending generates almost $1.7 billion in sales for regional economies.) The Service defines adaptation as “minimizing the impact of climate change on fish and wildlife through the application of cutting-edge science in managing species and habitats” and has made adaptation the centerpiece of its Strategic Plan.
Charged with preserving the natural and cultural heritage of our nation, adapting to climate change presents the National Park Service with many challenges. What should it do about the melting glaciers at Glacier National Park? Or the threats of flooding to historic Jamestown, VA (part of the Colonial National Historical Park)? The National Park Service’s Climate Change Response Strategy details long- and short-term actions in three major areas: mitigation, adaptation, and public communication. Measures to tackle the adaptation piece include planning, promoting ecosystem resilience, preserving the nation’s heritage, and protecting facilities and infrastructure.
Earlier this month, the EPA released its 2011-2015 Strategic Plan containing five strategic goals for advancing its environmental and human health missions, the first of which is “Taking Action on Climate Change and Improving Air Quality.” As part of its Strategy, the EPA recognizes that it “must adapt and plan for future changes in climate” and “incorporate the anticipated, unprecedented changes in climate into its programs and rules.”
And just last week at the first White House Council on Environmental Quality (CEQ) GreenGov Symposium there were three separate panels devoted to climate change adaptation. We heard presentations from the Army Corps of Engineers, CDC, CEQ, DOT, the Forest Service, HUD, OSTP, USDA, as well as a number of stakeholders including the state of Maryland, the Nature Conservancy, and the National Association of Clean Water Agencies (NACWA). All of which are very much engaged on the adaptation issue.
Finding it hard to keep track of all of these agencies and what they are up to? Don’t worry – we’ll be posting our newest adaptation report, Climate Change Adaptation: What Federal Agencies are Doing, to this site very soon.
Heather Holsinger is a Senior Fellow for Domestic Policy
Most Americans can recall from social studies class and Schoolhouse Rock that a bill becomes a law through a process of introduction, committee work, and votes in both chambers of Congress before being signed by the President. Yet in reality, Congress influences policy decisions and administrative actions in ways that are more complex and potentially less transparent.
The Constitution gives Congress the power of the purse over government. Congress passes annual appropriations bills that fund the various programs of the federal government, and the necessity for Congress to pass these bills every year makes them an attractive target to attach riders – legislative provisions not directly related to the bill at hand. Appropriations riders are added to a bill by a small number of Congressmen to avoid an open debate on the merits of a particular policy, relying instead on the political and practical necessity to pass the larger funding bill.
Several rider efforts have succeeded in prohibiting funding or delaying environmental programs, much as some are talking about doing to prevent EPA from implementing greenhouse gas regulation under the Clean Air Act. Unlike policy decisions set in authorizing legislation, funding restrictions only apply for the year of appropriations covered and must be renewed on an annual basis. Unfortunately, once the precedent is set, it is common for riders to reappear for multiple years, usually without an up-or-down vote on that specific policy decision.
When it comes to climate change, Rep. Joe Knollenberg (R-MI) took a bill that failed to gain any traction in the committee process and turned it into a barrier to productive climate work through the appropriations process. Reacting to the Kyoto Protocol, drafted in December 1997, Rep. Knollenberg introduced HR 3807, in May 1998, which would have prohibited the use of funds for “for rules, regulations, or programs designed to implement, or in contemplation of implementing, the Kyoto Protocol.” A broad reading of the phrase “in contemplation of” would have stopped federal funds from being used for any work on climate change, even educational workshops. When the bill failed even to move out of the Republican controlled committee to which it was referred, Rep. Knollenberg turned to the appropriations process, where he attached the bill as a rider to the appropriations bill that included FY1999 funding for EPA. The same language was included in several appropriations bills. In addition to the EPA bill, it was also included the next year for FY2000 funding. As a result, Rep. Knollenberg was able to inhibit the Clinton Administration’s climate change work without going through the regular process of enacting legislation.
Other environmental priorities have been the targets of appropriations riders and defunding efforts. These riders became popular shortly after the political upheaval of 1994, but the effects were often much longer lasting. Beginning in Fiscal Year 1996, a rider was attached annually to the transportation appropriations bill preventing increases in the Corporate Average Fuel Economy (CAFE) standard known as the “CAFE freeze rider.” Like the proposed riders on greenhouse gas regulation, this rider was in reaction to an action by the Clinton Administration, in this case an advanced notice of proposed rulemaking by the National Highway Traffic Safety Administration. The recurrence of this rider continued until Fiscal Year 2001 when the rider was dropped in favor of a study on raising CAFE standards, ultimately yielding to bipartisan support for new standards much later than initially anticipated.
Environmental advocates have also used riders to avoid open policy discussion and votes. One of the longest running annual appropriations riders was a prohibition on offshore oil and gas leasing off the East and West coasts and certain parts of Alaska. That rider was included in appropriations bills for 27 years, from 1981 to 2008, without ever being a stand-alone piece of legislation passed by Congress.
The lesson of these and the plethora of other riders included on appropriations bill every year is clear: these provisions have staying power. The inclusion of a one-year delay on greenhouse gas reductions could easily continue for two years – or even twenty. According to the scientific information available, we don’t have the luxury of waiting that long to reduce our emissions. Instead, the United States should proceed with the prudent and reasonable series of regulations that have been outlined and are being implemented under existing law following the 2007 Supreme Court ruling in Massachusetts v. EPA.
Michael Tubman is the Congressional Affairs Fellow