On the Issues: Critical Minerals in Policy, Projecting US Emissions, and More

Matt Fleck, Mary Glavey, and Elizabeth Wason

Twice a month, 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, and feel free to send us your feedback.

Here are some questions we’re asking and addressing with our research chops this week:

How can researchers collaborate to best understand—and best inform—the complex effects of policies that govern critical minerals?

In May, the Biden administration announced new and increased tariffs on a subset of raw materials and products that are imported from China, including critical minerals such as manganese, zinc, and cobalt—important components of clean energy technologies. The tariffs aim to support domestic industries that produce these technologies, which also have received an influx of federal funding from recent policies such as the Inflation Reduction Act. Understanding the complex effects of combined policies will be difficult, and policy progress may fall short, without interdisciplinary research, says Resources for the Future (RFF) Fellow Beia Spiller. In an article on the Common Resources blog, Spiller and coauthors discuss the benefits of applying an interdisciplinary perspective when informing policy—in particular, critical mineral policy—and introduce a new Critical Minerals Research Lab for PhD students that will support interdisciplinary research on related topics. “Research that is interdisciplinary can improve our understanding of the potential impacts of critical mineral policies and more accurately identify the impacts of proposed or ongoing policies,” the authors say. Apply to join the new Critical Minerals Research Lab.

As provisions in the Inflation Reduction Act are being implemented, what’s the effect on US emissions?

New York is the first state to receive funding from a provision in the Inflation Reduction Act that aims to improve energy efficiency in households. Low-income residents can receive rebates of up to $14,000 for heat pumps and other energy-efficiency upgrades. Incentives to electrify the US economy—including households—and incentives to build more clean energy to power an electrified economy are central to the Inflation Reduction Act and can help reduce US greenhouse gas emissions. In a recent blog post, RFF Fellows Kevin Rennert and Aaron Bergman assess the effects of the Inflation Reduction Act and other recent climate policies. This assessment is the first from RFF’s Carbon Scoring Project; RFF scholars will issue “carbon scores,” or evaluations of the effect of federal policies on US emissions. “The Inflation Reduction Act is projected to continue providing positive benefits,” say Rennert and Bergman.

Resources Roundup

Addressing Leakage in International Climate Policy

As countries enact more ambitious climate policies, firms may move to regions with fewer or less stringent regulations. This relocation, often referred to as “leakage,” permeates discourse around international climate policy. In a new issue brief, RFF Fellow Milan Elkerbout discusses the effects of leakage in climate policymaking by defining four types of leakage and detailing the similarities and differences between each type. “Rather than just speaking about generic leakage risk when justifying certain policy choices, climate policy discourse would benefit from precision about what exactly is at risk of leakage … and whose competitiveness is considered in need of safeguarding against the enactment of specific policy measures,” says Elkerbout.

Good Design of Electricity Markets Can Facilitate Reliable, Clean Energy

Challenges with the reliability of the electric grid can arise due to insufficient capacity to generate electricity during times of need; for example, when demand for electricity skyrockets (due to air-conditioning) during a heat wave. In a new report, RFF scholars Karen Palmer and Molly Robertson, alongside a collaborator at Pennsylvania State University, evaluate designs of electricity markets that can support a clean energy transition, based on the reliability of these designs and their flexibility in accommodating different types of energy resources. “Enhancing reliability in electric power systems with a significant amount of variable renewable energy requires incentivizing resource flexibility, both in investment and in operation,” say the authors.

Designing a Program to Reduce Emissions in Maryland

The Maryland Commission on Climate Change, a group established to help the state reduce greenhouse gas emissions and adapt to climate change, is considering a proposal for a cap-and-invest program. Cap-and-invest programs require businesses to purchase allowances to emit carbon dioxide from the government, which generally uses the revenue to help fund other climate programs. In a new report, RFF scholars Dallas Burtraw, Marc Hafstead, and Kevin Rennert outline options for the design of a potential cap-and-invest program in Maryland. “The process by which Maryland considers these options and makes its design decisions will be critical to the success and durability of the program,” say the authors. “Transparency, with robust public participation and comment, should be integral to the process as Maryland moves forward with the program.”

Improving Electricity Affordability in the Energy Transition

Many US households are struggling to afford their electricity bills, and utility companies are making significant investments in emissions reductions, which may end up increasing electricity rates for consumers in the short term. Last week, experts joined RFF to explore the steps that regulators, legislators, utilities, and nonprofits can take to address electricity affordability. “For low- and moderate-income households, short-term spikes in energy costs are just as disastrous as if they remain high long term,” said Cassandra Lovejoy, a participant on the panel and a project manager at the National Energy Assistance Directors Association. “35 percent of low-income households are unable to pay their bill in full every month and often have to lower other costs, like their grocery bill, to avoid falling short.”

#ChartOfTheWeek

Chart: US Department of Energy

Critical materials are non-fuel minerals, elements, substances, or materials that are essential to clean energy technologies and have especially risky supply chains, according to the Energy Act of 2020. Last year, the US Department of Energy updated the list of materials that the agency deems critical. In the agency’s assessment, lithium and nickel are the critical materials that will be most important for energy technologies between 2025 and 2035. The supplies of dysprosium, iridium, neodymium, praseodymium, and terbium have the highest exposure to risk in that time range. In total, 13 materials have been classified as critical.

Related People