Resources

  • How States Can Value Pollution Reductions from Distributed Energy Resources

    DERs are a growing part of the U.S. electric system and many state electric utility regulators are looking to more accurately compensate them by paying for a variety of the benefits that these resources provide. Most states are currently focusing on energy and distribution-level benefits, but this approach overlooks the environmental and public health impacts of DERs. Even though some states like California and New York have been working on analyses that include environmental attributes of DERs, few regulators have attempted a thorough evaluation of the environmental and public health benefits. Our report, Valuing Pollution Reduction, lays out a practical methodology for calculating the E value, the highlights of which are captured here. Specifically, this issue brief describes how to appropriately value environmental and public health benefits by monetizing the economic, health, and climate damages avoided emissions would have caused. State utility regulators can use the steps described here, weighing tradeoffs between accuracy and administrability, to implement their own program to holistically compensate DERs.

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  • Institute for Policy Integrity Comments to New York on Electricity Rate Design

    New York State is in the process of reforming its payment system for distributed energy resources (DERs), such as rooftop solar panels, away from a net energy metering policy that compensated these resources at retail electricity rates. Our comments to the New York Public Service Commission encourage the state to move towards rate designs that better reflect the underlying costs of generating, transmitting, and distributing electricity, including environmental externalities for all customers, including those who do not own DERs.

    Our joint comments with other stakeholders also offer high-level principles for rate design that can help achieve the state’s clean energy goals.

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  • Institute for Policy Integrity Comments on California’s Distributed Energy Resources Policy

    We submitted comments to the CPUC commending the agency for its revisions to the proposed analysis and recommending additional improvements. We encourage the CPUC to use the Societal Cost Test to not only gather information, but to use it as the primary tool to guide investment decisions. We also encourage the CPUC to follow its revised plan and our earlier recommendations by using the Social Cost of Carbon, as developed in 2016 by the federal government, to consider the climate benefits that DERs can provide by displacing fossil fuel generation. We also encourage CPUC to use methods developed by the US Environmental Protection Agency to calculate the air quality benefits that DERs can provide, while the state develops a more robust method. These actions will allow the Commission to make investments that provide the greatest net benefits.

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  • How the Trump Administration Is Obscuring the Costs of Climate Change

    When federal and state policymakers account for the impacts of climate change, they regularly use a tool called the Social Cost of Carbon (SCC). The SCC puts a dollar value on the most significant, quantifiable damages caused by each additional ton of carbon dioxide emitted. The most recent estimate of the cost is at least $51 per ton and rising over time. But now, turning its back on years of work, the Trump administration has disbanded the federal group that developed the SCC, and produced a new “interim” estimate claiming that each ton of carbon dioxide causes as little as $1 in climate damages. This issue brief describes how the Trump Administration reached this misleading number by ignoring the interconnected, global nature of our climate-vulnerable economy and obscuring the devastating effects that climate change will have on younger and future generations. Though the administration has been proposing rollbacks of environmental rules using this problematic SCC estimate as justification, we explain why federal agencies and state governments should continue using the most recent estimate by the Interagency Working Group that developed the SCC.

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  • Federal Lands and Fossil Fuels: Maximizing Social Welfare in Federal Energy Leasing

    This Article suggests a rational path forward for federal fossil fuel leasing. Just as a private company would seek to maximize net revenue in its operations, Interior should seek to manage its program to provide maximum net benefits to the public, to whom public resources belong. This includes accounting for all of the costs and benefits of leasing—including environmental and social costs—and adjusting the fiscal terms of its fossil fuel leases to recoup unmitigated externality costs. The Article describes how maximizing social welfare is consistent Interior’s statutory mandates, legislative history, judicial precedent, and principles of executive review that instruct agencies to maximize the net benefits of their policy choices. The reforms suggested here can significantly increase revenue for states and the federal government while reducing greenhouse gas emissions, illustrating the utility of using fiscal reform as a policy lever in the absence of comprehensive climate change legislation.

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  • Mineral Royalties: Historical Uses and Justifications

    Governments and private landowners have collected royalties on mineral resources for centuries. When comprehensive measures to account for the environmental externalities of mineral extraction are politically or practically unavailable, federal and state governments may consider adjusting royalty rates as an expedient way to account for these externalities and benefit society. One key policy question that has not received attention, however, is whether a royalty rate can and should be manipulated in this way, assuming statutory discretion to do so.

    This article fills that gap by evaluating the argument for increasing federal or state fossil fuel royalty rates through historical, theoretical, and practical lenses. To that end, this article in turn considers the meaning of royalties, the economic justifications for royalties, the legislative history of the implementation of federal royalties, and the considerations that private landowners have relied upon in setting royalties. This article concludes that it would be appropriate for governments to adjust mineral royalty rates to account for negative externalities not otherwise addressed by regulation or to otherwise promote public welfare. Such use of royalties is consistent with the historical record. Royalties have been used as pragmatic policy tools from almost their inception, and federal and state governments have often exercised their existing statutory discretion to adjust mineral royalty rates to promote public welfare.

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  • Institute for Policy Integrity Comments to Colorado Public Utilities Commission on Electric Resource Planning

    The Colorado Public Utilities Commission is revising their electricity resource planning process. Our comments to the Commission suggest legal language for incorporating externalities, like the climate effects of greenhouse gas emissions, into the state’s electricity policy. We also explain why the Social Cost of Carbon, as developed by the federal government in 2016, is the best tool for incorporating the externalities of carbon emissions into policy.

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  • Institute for Policy Integrity Comments to New York State on Clean Energy Standards for Existing Generators

    New York State plans to provide support to some existing small hydro, wind, and biomass generation facilities at risk of closure, in order to prevent the state from backsliding on its ambitious clean energy goals. The New York Public Service Commission released a report on the Clean Energy Standard Tier 2 Maintenance program, which focuses on the criteria a generator should meet in order to receive financial support and how these payments should be determined.

    Our comments on the report encourage the Commission to harmonize these payments across all proposed review processes for Tier 2 generators. We also encourage the Commission to consider how the program will interact with other energy initiatives in the state, including a potential carbon charge on wholesale electricity markets and a program that values the environmental benefits of distributed energy resources. These changes would enhance the program’s economic efficiency and help ensure that the state meets its decarbonization goals.

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  • Institute for Policy Integrity Comments on Carbon Pricing in Wholesale Electricity Markets to New York

    Our comments to New York State Department of Public Service and New York Independent System Operator encourage the state to pursue carbon pricing, as it is the most economically efficient and technology-neutral way to internalize climate damages from greenhouse gases. We argue that the price used for carbon damages, the mechanisms to prevent emission leakage, and the allocation of revenue collected from emitting sources will all affect the level of emissions reductions the state can achieve through policy. The design of the program will determine its success in reducing emissions, and we encourage New York to consider carefully the benefits of different implementation plans.

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  • Institute for Policy Integrity Comments to the Public Utilities Commission of Nevada on the Social Cost of Carbon

    Nevada recently passed SB 65, a bill updating the state’s electricity planning process and boosting resources that provide economic and environmental benefits to the state. The Public Utilities Commission of Nevada subsequently held a series of formal and informal workshops and calls to shape the new regulation required under SB 65. We submitted joint comments with other stakeholders that included consensus language for several sections of the regulation. We also note in these comments that while stakeholders did come to an agreement on most issues, questions remain on how to define the social cost of carbon for the implementing regulation. Accordingly, we submitted supplemental comments to the PUC, discussing how the social cost of carbon is used by several other states, including in state electricity regulations and proceedings. We note that Colorado, Illinois, Maine, Minnesota, and New York use SCC estimates from the federal Interagency Working Group, and recommend that the Nevada PUC follow a similar approach.

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