Monday, March 8, commemorates International Women’s Day, and Resources for the Future (RFF) is celebrating a little early with this special edition of “On the Issues.” This week, we principally highlight research, blog posts, events, and other editorial products driven by women at RFF.
And as always, 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. Keep reading, send us your feedback, and consider what you or your organization can do to amplify the work of women.
Here are some questions we’re asking and addressing with our research chops this week:
Sky-high electricity prices and bankrupt energy providers are just some of the consequences of the recent power crisis in Texas. What lessons can policymakers and grid operators apply to prevent future disasters?
Millions lost power and dozens died in Texas last month, after an unusually extreme winter storm prompted what may have been the most expensive week of electricity in US history. Now, the Electric Reliability Council of Texas (ERCOT), which manages the state grid and collects money from electricity providers to pay power plants, is confronting a related financial crisis: energy companies are unable to pay their mounting bills. ERCOT is owed $1.66 billion in charges from a variety of providers, including Brazos—the state’s oldest and largest electric power generator—which filed for bankruptcy this week over its delinquent payments. Another provider, Griddy, has been temporarily barred from participating in the state’s power market due to its outstanding bills to ERCOT. Griddy’s ability to stabilize its finances and pay off its debts remains in doubt, as the company now confronts a lawsuit from the state government alleging that the company misled consumers about the risk of signing on to a plan with variable rates.
In a new Q&A blog post, RFF Senior Fellow Karen Palmer and Senior Research Associate Kathryne Cleary explain why so many Texas households lost power and what can be done to stave off future crises. Palmer points out that “not just the electricity system, but also the natural gas system” failed and suggests that more federal oversight—such as an entity appointed by the Federal Energy Regulatory Commission to oversee the bulk gas system—could ensure more reliability. Cleary also notes that grid operators need to plan for challenges that could arise with increased integration of renewables. “The definition of what we consider to be ‘extreme’ weather could change,” Cleary says. “An extreme future scenario could be that we experience several days without sufficient sun or wind, which could really affect the grid.” For more on the future of electric power, read a recent report from the National Academies of Sciences, Engineering, and Medicine coauthored by Palmer and RFF Board of Directors Chair Susan Tierney.
Related research and commentary:
The federal government has released a new interim estimate for the social cost of carbon. How will the Biden administration approach the estimation of a final value for the social cost of carbon over the next year?
Earlier this year, President Joe Biden reconvened an interagency working group that was disbanded under the Trump administration and tasked it with developing a new social cost of carbon estimate. Last week, that group formally raised the social cost of carbon to about $51 per ton, an interim figure that updates Obama-era estimates for inflation. The social cost of carbon (SCC), an estimate of the economic damages that result from emitting one additional ton of greenhouse gases into the atmosphere, is used in benefit-cost analysis and informs a variety of federal environmental regulations. While the Biden administration already has dramatically increased the SCC relative to the Trump administration’s estimates of $1–$7 per ton of CO₂, decisionmakers have much to consider as they establish a more permanent estimate over the the next year: variables such as the discount rate, the international consequences of carbon pollution, and equity issues.
“The SCC is having its moment again,” says RFF’s Kristin Hayes on the Resources Radio podcast this week. In the new episode, RFF Fellow and Director of the Social Cost of Carbon Initiative Kevin Rennert provides a brief history of how the SCC has informed climate policy and elaborates on the complexities that policymakers must consider as they update the metric. Rennert emphasizes that the interagency working group that’s assessing the SCC needs to employ a clear, consistent, and transparent process for crafting a more permanent estimate. “One can imagine that certainly there’s going to be a lot of chance for stakeholder input,” Rennert says. “Like, how should the process look? What are the relevant scientific inputs that should be taken into consideration for this?” Listen to the new episode for more details about how the social cost of carbon relates to federal climate policy, and dive into more insights about how environmental policy may unfold in the Biden administration by exploring Resources Radio’s recent “Big Decisions” series—featuring contributions from Amy Harder, Paula Glover, Mary Nichols, Jody Freeman, and more.
Related research and commentary:
How can the National Flood Insurance Program address its mounting debt and impose premiums that better reflect intensifying climate risks?
The Federal Emergency Management Agency (FEMA), which operates most of the nation’s flood insurance plans, is expected to announce premium spikes next month that better reflect the risks of living in flood-prone areas. The National Flood Insurance Program faces billions of dollars in debt because insurance premiums have not kept up with actual flood-related damages—which have been escalating—even as climate change continues to increase the likelihood and severity of extreme weather events. How inclined the Biden administration will be to drastically hike rates remains unclear; in the meantime, a new report from First Street Foundation suggests that premiums would have to quadruple this year in especially vulnerable areas in order to accurately reflect climate risks, and increase to seven times the current rates by 2050 (though FEMA has been quick to clarify that First Street Foundation’s projections should not be interpreted as the actual rates). However, policymakers across the country generally have been reluctant to enact policies that impose burdensome costs on ratepayers or could dissuade development in coastal areas.
In a recent article from the new issue of Resources magazine, RFF University Fellow Carolyn Kousky outlines how the Biden administration can equip for extreme weather, build resilience, and modernize federal programs to better adapt to growing climate risks. Kousky points to FEMA’s recent attempts to improve the correspondence between premiums set by the National Flood Insurance Program and climate dangers as “long overdue” and critical for sending accurate price signals in housing markets. Highlighting equity concerns in the program’s operations, Kousky also suggests that federal officials can consider subsidizing flood insurance costs for lower-income families and factoring home values into premiums to ensure that wealthier households pay their fair share. “Too much time has been wasted already,” Kousky concludes. “As we begin the urgent work of transitioning to a low-carbon economy, we also can begin the task of building equitable climate resilience across the country.”
Related research and commentary: