RFF President and CEO Richard G. Newell commemorates RFF’s 70th-anniversary year by examining lessons from RFF’s history, looking forward to how RFF research and engagement can support the transition to a net-zero economy, and reflecting on RFF’s recent Net-Zero Economy Summit.
This year marks the 70th anniversary of Resources for the Future (RFF). While it certainly is a milestone to celebrate—along with the impact of the rigorous research that RFF has produced over the last seven decades—it also provides an occasion to reflect on how we got here and to look forward to the challenges remaining before us—especially climate change.
I have a strong sense that what draws such a diversity of talent to the conversation around climate change is the same thing that compels me personally to increasingly focus my efforts on solving the climate problem. It’s not because it is simple, confined, and easily fixed; rather, it’s because climate change is complex, connected to everything else, and will take sustained effort to resolve. Most importantly, the health of multiple generations depends on us finding solutions wherever we can.
But before I explore the transformative decisionmaking needed to both deliver net-zero greenhouse gas emissions and advance our economic well-being, I want to take a step back and tell the story of RFF, because the history of this incredible institution reveals critical lessons for today. It shows us how drawing on ingenuity and innovation can help us surmount big problems, even problems on the magnitude of global climate change.
The Origin of RFF
Let’s turn back the clock to 1952. That’s the year RFF was founded, making it the very first think tank to focus exclusively on environmental and natural resource issues. To put that in perspective: Before there was an Environmental Protection Agency, or a Clean Air Act, or an Earth Day, there was Resources for the Future.
What kind of a world was RFF born into? The United States was only recently emerging from World War II. At the same time, it was grappling with the heavy and unforeseen demands of the ongoing war in Korea. Public concern ran high about the supply of natural resources and the future availability of materials that are critical to human development, including minerals like copper, nickel, and cobalt. This might sound like the critical-minerals discussion of today, but these concerns were prevalent around 1950, too.
That’s why, in 1951, President Harry Truman established the Materials Policy Commission. The commission’s mandate was to study the long-range outlook for the country’s natural-resource needs and help guard against shortages that could harm national security and economic development. The commission’s final report recommended the creation of an independent organization to analyze the development, conservation, and use of the country’s natural resources. Resources for the Future was that organization—created specifically to serve that national need.
RFF’s Inaugural Research
So, what did RFF’s experts find? Did the United States have sufficient natural resources to last us through the rest of the twentieth century—including enough resources to allow for the country’s growth?
Studies were written, books were published, and, in due course, they felt they had a definitive answer: While supply gaps would occur from time to time, the evidence suggested these shortages could be overcome, but only if multiple forces were aligned in that direction. It would take market forces, helping to encourage new supply sources and demand conservation; it would take innovation to create alternatives to scarce resources and use them more efficiently; and it would take global collaboration through increased trade to link demand needs with supply sources in what was becoming an increasingly interconnected world.
The idea that such growth in resource needs could be met was scarcely a believable conclusion at the time. It ran contrary to conventional wisdom. But, in the best RFF tradition, our scholars were confident in the evidence and methods they brought to bear. Decades later, their conclusion has been proven right.
Balancing the Need for Natural Resources with Human Health and the Environment
Or, at least, largely right. While the United States and the world have been incredibly successful in meeting increasing material resource needs, this has often come at the expense of human health and the environment. It turns out that the environment has ended up being the truly scarce resource.
Environmental concerns began to be addressed through policies such as the Clean Air Act, which was passed in 1963, and many subsequent environmental laws. By 1965, rising concerns about environmental pollution also led to the creation of a new Quality of the Environment Division at RFF.
Using Market Forces to Protect the Environment
Something else radically different was also happening during the 1960s: RFF scholars were developing entirely new fields—environmental economics and natural resource economics—and new methods that would help shape generations of environmental research. RFF began developing the techniques needed to compare the impacts of different policy interventions, along with tools to measure the benefits of environmental protection in economic terms so that those protections could compete on a level playing field with the costs of taking action.
Around the same time, another new idea began to percolate at RFF. The idea ran completely counter to the thinking of the day. RFF scholars, including pioneers like Allen Kneese, were showing how market forces could be harnessed to combat the pollution of America’s rivers, dams, and lakes. By attaching a price to water pollution, we could improve on traditional approaches to regulation by creating incentives to find the most effective and efficient ways to drive that pollution down.
Once again, many people were skeptical. Surely, economics had no place in this type of policymaking—big business was part of the problem, not part of the solution. After all, industry was causing pollution in the first place.
This didn’t deter RFF scholars. They showed how the unconventional idea of applying market forces to solve big problems could be applied to many other environmental challenges beyond just water pollution.
There was only one issue with the use of market incentives in policymaking at that time: It was highly theoretical, and it hadn't yet actually solved an environmental problem. In fact, it wasn't until two decades later, as we struggled to solve the problem of acid rain, that the country turned to a market-based environmental policy, and it did so in a big way.
Solving the Acid-Rain Problem
Remember acid rain? We barely think about it today, but the principal cause of acid rain—sulfur dioxide emissions—created significant damage. Acid rain was killing forests, corroding buildings and bridges, and threatening human health. So, in 1990, Congress set out to reduce these emissions, which mainly came from coal power plants, by updating the Clean Air Act. But this time, rather than specifying exactly what new technologies needed to be installed, Congress turned to the kind of flexible, incentive-based approach that Kneese had developed decades before.
In short, the United States built the world’s first major cap-and-trade program, the Acid Rain Program. The program limited emissions to a safer level, creating a market for allowances and encouraging power-plant operators and innovators to find the best way to stay within those limits, whether by switching fuels, installing scrubbers, or improving the operating efficiency of plants. In doing so, the Acid Rain Program used a novel idea, based on RFF research, as its blueprint. Needless to say, RFF scholars were on hand in the early 1990s to conduct crucial modeling of the impacts of the program.
How did things turn out? The Acid Rain Program was extraordinarily effective. It helped reduce annual nitrous oxide emissions by 87 percent and sulfur dioxide emissions by 93 percent. Even we at RFF were surprised by how efficiently and inexpensively sulfur dioxide emissions could be drawn down from the nation’s power plants through this program.
Acid rain had once seemed an intractable, near-impossible problem. Incredibly, the answer to the Acid Rain problem had been largely untried and untested. Until it was tested. It worked, but it didn’t just happen. It was the product of creative thinking, a willingness to set aside conventional wisdom, and an approach to policy that expanded who and what could be part of the solution. It was an idea that showed how the very same economic forces that contributed to a problem could be harnessed to fix it.
Meeting the Climate Problem
Even as the nation was beginning to make inroads on the Acid Rain problem, the enormity of the climate problem was becoming clear. One of the first major international steps to solve the climate problem was the 1992 Framework Convention on Climate Change. It set in place the goal of stabilizing concentrations of greenhouse gases in the atmosphere at a safe level. More recently, the Paris Agreement represented another major leap forward, by recognizing the need to keep warming under 2°C.
These were momentous developments that set important end goals, but the goals have been difficult to translate into action. After all, no single nation directly controls atmospheric concentrations or indeed the Earth’s temperature. These are byproducts of something else: emissions. This is why targeting emissions, such as carbon dioxide and methane, is so important, because emissions are something we can control and drive down. What’s more, because greenhouse gas emissions accumulate, in order to stabilize the atmosphere and prevent further temperature increases, we need to drive emissions down to a particular level: net zero.
Why Net Zero?
In keeping with lessons learned from the Acid Rain Program, there’s an advantage to setting objectives that aren’t overly prescriptive—objectives that open up the solution set and expand options so that we can be successful in stabilizing the climate and do it in a way that’s efficient and equitable. After all, while we draw down greenhouse gases, some emissions will still be unavoidable in the near term.
Alongside strategies that eliminate new emissions, a net-zero orientation opens our minds to options that remove carbon dioxide directly from the atmosphere. By setting the right incentives for carbon dioxide removal, we can take advantage of natural climate solutions, such as forests and soils, and encourage the development of entirely new advanced technologies, like direct air capture.
Pursuing net-zero emissions therefore focuses everyone’s attention on an outcome that can be directly controlled and is scientifically consistent with stabilizing the climate, inclusive of technology, open to innovation, and ready to harness the power of incentives.
Unlike some other climate goals, net zero also is scalable at multiple levels for a wide range of decisionmakers. A nation cannot directly measure how many tenths of a degree of warming have been reduced by its actions, let alone an individual company. But progress can be measured by whether actions are increasingly on a path to net-zero emissions. This can be measured at the level of the whole world, a nation, a state, or an individual business. Net zero brings the challenge of climate change down to the level of a balance sheet: emissions in plus removals out.
The best solutions for today may nonetheless differ from the approaches we’ve successfully used in the past and from what we thought we would be relying on just a few years ago.
Like other great ideas, net zero took some time to catch on, but decisionmakers are increasingly turning to it as a powerful guiding principle. More than 33 countries and the European Union have adopted net-zero emissions targets in law or policy, including the world’s largest emitters. 137 of the world’s 198 countries have set a net-zero target of some kind. These countries represent some 80 percent of the global population, 83 percent of global emissions, and 91 percent of global GDP. Many major corporations and firms in the financial sector have also made net-zero commitments, with over $130 trillion of private capital committed to transforming the economy for net zero.
Before delving further into some of the key opportunities and challenges of a net-zero economy, I want to take us all back to RFF’s founding for one more moment, because RFF’s story spans the most consequential century in environmental history. While the challenges facing our planet have changed, RFF’s approach and our commitment to solving them has not.
The Net-Zero Economy Summit
In December 1953, RFF hosted what was called the “Mid-Century Conference on Resources for the Future.” It took place in Washington, DC, focusing on the resources needed to support the demands of a growing population, underpin sound economic growth, and ensure national security. We now face a climate crisis that itself must be solved by midcentury. It seems appropriate, therefore, that this October, RFF hosted the Net-Zero Economy Summit, helping to lead the conversation.
So, how do we build a net-zero economy and surmount the global climate challenge? Conversations at the summit examined both the opportunities and the challenges of delivering a net-zero economy. We tapped some of the best thinkers in the United States and internationally to uncover the system-wide transformations needed to build a net-zero economy through solutions that are effective, efficient, and equitable.
At the summit, our speakers and panelists pursued questions essential to net-zero goals:
- How can we spur innovation and its deployment to decarbonize the industrial sector?
- How do we deliver net-zero strategies for transport and industry that spur innovation in a diverse technology portfolio and drive deployment at scale?
- How can we fully seize the power of land as a carbon sink to remove emissions and sustain people and ecosystems?
- What must we do to increase global incentives to decarbonize while maintaining international competitiveness?
- What actions must we take now to live in a changing world where sea level rise, wildfires, and flooding are increasing in both frequency and intensity?
- How do we build an electricity market and policy structure that enables 100 percent clean, reliable, and affordable power around the clock and across seasons?
As you explore these discussions, I invite you to reflect on the forces I identified earlier that were crucial to the economy’s ability to meet the resource needs of the second half of the past century: the forces of market incentives, technology innovation, and international collaboration, with each of them guided by well-designed policy. Just like we need innovation in zero-emissions technologies, we need innovation in the market, policy, and financial structures that must underpin a net-zero economy.
We also need these structures to be more equitable in delivering the benefits and distributing the costs of actions taken. In short, we need the economy to work for the climate, even as it fulfills our other needs.
Ideas for the Future
The best solutions for today may nonetheless differ from the approaches we’ve successfully used in the past and from what we thought we would be relying on just a few years ago. In the best traditions of RFF, I therefore encourage you to be on the lookout for ideas that might seem unconventional or untested—ideas that might fly in the face of current conventional wisdom, but just may hold the key to our future.
This blog post was adapted from Newell’s opening speech at the Net-Zero Economy Summit, featured below.