Each week, we’re compiling the most relevant news stories from diverse sources online, connecting the latest environmental and energy economics research to global current events, real-time public discourse, and policy decisions. Here are some questions we’re asking and addressing with our research chops this week:
An ideologically diverse group of policymakers supports setting aside more federal funds to study advanced energy technologies. Do the benefits of such investments outweigh the costs?
President Joe Biden has made clear that he supports a substantial increase in federal funds to support the research, development, and demonstration (RD&D) of advanced energy technologies. First, Biden’s American Jobs Plan suggests devoting billions of dollars to research into “climate R&D priorities,” such as energy storage, carbon capture, and advanced nuclear reactors. Then, Biden's budget request to Congress, released shortly thereafter, asks for $10 billion to support “clean energy innovation.” The forthcoming infrastructure bill could be the administration’s best chance to secure such funding, although Republicans have largely balked at the plan’s trillion-dollar price tag. But compromise is possible: clean energy RD&D has been a rare unifier within Congress, culminating in the passage of a major energy innovation package last year. Looking forward, both the Democratic chair and top-ranked Republican on the Senate Committee on Commerce, Science, and Transportation have signaled that more funds for RD&D are a bipartisan priority.
In a new working paper and accompanying issue brief, RFF’s Daniel Shawhan, Kathryne Cleary, Christoph Funke, and Steven Witkin find that the benefits of investing in RD&D for key advanced energy technologies are likely to greatly exceed the costs. The study takes a close look at five technologies for which additional funding was proposed in the bipartisan Energy Act of 2020—advanced nuclear, advanced geothermal, diurnal energy storage, natural gas with carbon capture and sequestration, and direct air capture. The scholars then rely on detailed projections from over two dozen technology experts and power sector simulation modeling to estimate the economic, health, and climate benefits of these RD&D investments. The results indicate that ten years of funding, maintained at levels like those proposed by the Energy Act, could reduce the costs of the technologies by 9–30 percent in 2035, generate average societal benefits of $30–40 billion per technology in 2040–2060, and reduce electricity costs for consumers. They note, too, that the average projected benefits per technology exceed the costs by a factor of ten if a national clean electricity standard is implemented.
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What will happen next with the Dakota Access Pipeline and energy development more broadly on tribal lands?
After years of political disagreements and legal setbacks, the Dakota Access Pipeline is still online, though its future is in jeopardy. Construction on the pipeline stalled during the Obama administration, before former President Donald Trump ordered the Army Corps of Engineers to speed its approval process. But last year, a district court judge ruled that the Trump administration failed to sufficiently consider the potential environmental impacts of the pipeline, which passes below a lake used by tribes on the Standing Rock Sioux reservation for drinking water. Although some activists support shutting down the pipeline while the environmental review is in progress, the Army Corps wants to keep the pipeline running as it finalizes its analysis before the March 2022 deadline. In the interim, investors are wary about supporting additional production that might prove costly to transport in the absence of a pipeline, and the project’s owner has warned that the legal uncertainty will economically burden the state of North Dakota and the nearby Mandan, Hidatsa, and Arikara Nation, where a substantial amount of Bakken oil is produced.
These Three Affiliated Tribes, known as the MHA Nation, in some ways epitomize the complex relationship that tribes have with oil and gas development. While many Indigenous groups have strenuously opposed the Dakota Access Pipeline, the MHA Nation historically have profited from fossil fuels and have staked out a more nuanced position on the pipeline. On a new episode of the Resources Radio podcast, Quarles & Brady Partner Pilar Thomas explains that many tribes are economically dependent on oil and gas development. Warning of the “single resource curse,” Thomas describes how some tribes are pivoting beyond a singular focus on casinos or fossil fuels and have been taking a closer look at renewable energy projects. Because tribes exercise authority outside federal and state law, Thomas contends that tribes are uniquely positioned to innovate around energy issues and develop strategies around energy poverty. “Everybody else is stuck with whatever the state will let them do,” Thomas says. “But tribes don't have to be stuck.”
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How can electric vehicle subsidy programs be structured to cost-effectively boost sales and benefit consumers equitably?
California boasts some of the nation’s most ambitious electric vehicle (EV) goals, including plans to ban the sale of gas-powered vehicles by 2035, and has a higher percentage of EV buyers than any other state. But the state’s key program for boosting EV sales among low- and middle-income households has run out of money, potentially imperiling Governor Gavin Newsom’s climate commitments. The 11-year-old EV rebate program has subsidized EV purchases for around 65 percent of EV buyers in the state and was reformed in 2016 to restrict eligibility to households below certain income thresholds. However, the program has proven costly, and Newsom’s budget proposal for this year suggests redirecting funds from the program to build more charging stations and provide more incentives for specifically lower-income Californians to purchase EVs. Unless Newsom and proponents of the rebate program in the legislature can reach an agreement on the state’s strategies for decarbonizing transportation, new EV buyers might never receive state rebates, and consumer interest in EVs could decline.
In a new blog post from an ongoing series about accelerating electric vehicle deployment, RFF Senior Fellow Joshua Linn explores whether proposals to target EV subsidies at lower-income households could boost sales at justifiable cost. As one example, Linn points to California’s rebate program, which, “while effective at boosting interest among these households, is costly.” Still, Linn points to research that he and colleagues have conducted showing that lower-income households are more responsive to car price increases than higher-income groups, which suggests that targeting larger subsidies to lower-income households could increase consumer interest in EVs. Indeed, Linn examines three hypothetical subsidies and finds that a subsidy that targets lower-income households increases sales more cost-effectively than a subsidy available to all buyers or a subsidy only for EVs at below-average prices. “At least in this case of subsidies for electric vehicles, prioritizing equity does not trade off with effectiveness,” Linn writes.
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