On the Issues: Environmental Deregulation, Canadian Fuel Tax, and More

Maya Krainc, Matt Fleck, 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’ve been asking and addressing with our research chops lately:

What’s next for regulations on greenhouse gas emissions from power plants, and how might anticipated deregulation affect emissions from the electricity sector?

Last week, the head of the US Environmental Protection Agency (EPA) announced plans to “reconsider” (i.e., roll back) 31 environmental policies. Legal challenges await the agency, but the deregulation efforts still may substantively constrain or reverse US progress on mitigating climate change. Among the EPA policies in question is a set of regulations that limit greenhouse gas emissions from certain coal-fired power plants and natural gas–fired power plants. “These regulations would yield significant emissions reductions,” say Resources for the Future (RFF) Fellow Aaron Bergman and former RFF Research Associate Maya Domeshek in a new blog post about the projected effects of the regulations. Factors like energy prices and new federal policies may lead to emissions levels that differ from these projections, add Bergman and Domeshek. “Ultimately, the most prevalent form of uncertainty for the power sector may be this ever-changing landscape of regulation and litigation, repeal and reconsideration,” they say.

What does the recent change in Canada’s leadership mean for the future of the country’s climate policy?

Mark Carney, the new prime minister of Canada, eliminated a controversial fuel tax as his first action upon being sworn in and assuming leadership of the Canadian Liberal Party. The policy, which taxed consumer use of fossil fuels while issuing rebates to consumers, had disincentivized fossil fuel consumption and had financially benefited most Canadian households. But the policy was no longer seen as politically viable after becoming deeply unpopular with the public. In this week’s episode of Resources Radio, Aaron Cosbey breaks down what went wrong with the fuel tax. “It’s a complicated policy to try to communicate to the public,” says Cosbey, a senior associate at the International Institute for Sustainable Development. “If you can’t communicate that it’s happening and why it’s happening, then it can be as perfect a policy as you want, but it’s a useless policy.” He also discusses what the changes in Liberal Party leadership—and, potentially, national leadership after the next election—means for Canadian climate policy and emissions-reduction commitments.

How can stakeholders balance demand for critical minerals with the health and concerns of local communities?

A Canadian mining company has secured a $250-million investment to complete construction of a lithium mine at Thacker Pass in Nevada. Lithium is essential to the manufacture of many electric vehicle batteries. However, Indigenous and civil rights groups oppose the mine, arguing that it was approved without sufficient consultation and violates the rights of local Native nations. The conflict highlights the importance of community engagement during the development of critical mineral mining projects. “The resolution of concern and opposition is more likely when sufficient time is allowed for dialogue and relationship-building between a project developer and a community, community concerns are meaningfully addressed, and opportunities for local benefits are better understood and maximized,” say RFF Fellow Beia Spiller and researchers Aaron Malone and Jason Prno in a recent Q&A blog post about how engagement between communities, mining companies, and other organizations can help reduce risks and create shared value.

Evergreen Time Machine

RFF research from our archives offers historical background and possible solutions for the challenges in today’s news.

[US Environmental Protection Agency] action under the [Clean Air Act] is a clear second-best option to new legislation from Congress, especially over the long term. While it is possible to identify some readily available opportunities for emissions reductions and push them via regulation (with market tools to keep costs down), it quickly becomes difficult to identify what steps should be taken next … Comprehensive climate legislation could … establish a uniform carbon price across sectors, provide for international offsets, create greater opportunities for innovation, and include other cost-saving mechanisms that the Clean Air Act cannot provide.

Nathan Richardson, Arthur G. Fraas, and Dallas Burtraw (December 2010)

Last week: Among the policies that the US Environmental Protection Agency is reconsidering is a 2009 declaration known as the “endangerment finding,” which established that greenhouse gases are harmful to human health and welfare. The endangerment finding is the basis for federal regulation of greenhouse gas emissions from vehicles, power plants, and other emitters. In 2010, RFF scholars argued in Resources magazine that regulation under the authority of the Clean Air Act—and underpinned by the endangerment finding—was the next-best option for the federal government to reduce emissions after new climate legislation. Major climate legislation arrived in the form of the Inflation Reduction Act, which became law in 2022, but some of the climate provisions in the law may be repealed by the current Congress.

Expert Perspectives

Reversal of Key Climate Finding Would Limit Federal Regulation of Greenhouse Gases

The endangerment finding compels the federal government to regulate greenhouse gas emissions—but the US Environmental Protection Agency will attempt to reverse it. This attempt to reverse the finding likely faces legal hurdles.

“The endangerment finding is based on scientific research,” says RFF Senior Fellow Dallas Burtraw. “Greenhouse gas emissions cause changes in the climate, and these changes endanger human health and welfare. The scientific community would not support a reversal of the endangerment finding; established scientific evidence is stronger now than in 2009, when the Environmental Protection Agency first issued the finding. But if the endangerment finding were axed, federal regulation of greenhouse gases would disappear, more or less. So, what then?

“Some support in Congress exists for trade policies that measure or tax emissions associated with imported goods. Other than that, states will be the level of government at which many policies are implemented; a number of states have committed to achieving significant emissions reductions.”

Resources Roundup

Evaluating the Role of Wood Products as Carbon Offsets

Even after a tree has been harvested, wood can continue to store carbon in the form of wood products. In turn, high demand for wood products can encourage tree planting, and those new plants absorb carbon dioxide. But researchers face challenges in determining the extent to which these markets are sustainable, profitable, and stable, along with how much wood products actually offset carbon emissions—particularly as wildfires become more frequent and consume wood houses and contents. Researchers and experts in the forestry sector will discuss these challenges and the role of wood products in sequestering carbon in a webinar hosted by RFF next week Wednesday, March 26. Register for the webinar.

Economic and Environmental Effects of Increasing US Exports of Liquefied Natural Gas

The United States is the largest exporter of liquefied natural gas (LNG) in the world, a trend that has consequences for domestic oil and gas prices and for emissions of methane, a potent greenhouse gas which often leaks from oil and gas production sites. RFF Fellow Brian C. Prest joined Resources Radio last week to discuss the potential effects of increasing LNG exports and the effects of US LNG substituting for other energy sources around the world. “Within the United States, different parts of the country produce gas with higher or lower [methane] leak rates, and that can matter quite a bit in terms of the life-cycle carbon intensity of the LNG,” says Prest.

Policy Options for Decarbonizing Maryland’s Electricity Sector

Maryland has a goal to decarbonize its electricity sector, but to achieve this goal—100 percent clean electricity consumption by 2040—the state will need to rethink its existing clean energy standards. In a new blog post, RFF scholars Dallas Burtraw, Nicholas Roy, and Karen Palmer present three policy frameworks that could accelerate progress toward that goal by strengthening standards for electricity derived from clean sources, encouraging investment in clean energy technologies, and improving incentives for compliance with clean electricity standards. “Siting more generation capacity within the state may provide greater local resilience and give Maryland more options in future energy planning,” say the researchers.

Assessing the Risks of China’s Large Market Shares of Critical Minerals

Critical minerals—such as cobalt, lithium, and nickel—are key components in electric vehicle batteries. Affordable and stable supplies of these minerals are essential in the transition to low-carbon vehicles. Securing these minerals is of increasing interest to US policymakers, as concerns mount about China’s large market share in processing many of these minerals. In a new blog post, former RFF intern Sangita Gayatri Kannan and RFF Senior Fellow Michael Toman assess how China could take advantage of its market power and consider the cost and feasibility of rapidly expanding non-Chinese processing operations. “The uncertain risk of price discrimination needs to be weighed carefully against the risks associated with a massive and rapid build-out of new processing capacity in the United States and allied countries,” say Kannan and Toman.

Maintaining Momentum for Decarbonization in New York State

New York State has delayed its cap-trade-and-invest program, which aims to reduce greenhouse gas emissions by setting limits for large emitters while providing flexibility in how emitters meet those limits. Revenue from the program is used to provide direct rebates to households and fund clean energy products. RFF scholars Alan Krupnick and Wesley Look analyze the consequences of delaying the cap-trade-and-invest program in a new blog post and discuss how state leaders can maintain momentum for the program in the meantime. “Assurance from the governor that the program will be implemented can help continue forward momentum and offer stakeholders clarity and confidence about implementation in the future,” say the researchers.

🎨 Climate in the Culture 🎵

Still from Lowland Kids, courtesy of Together Films

The 33rd DC Environmental Film Festival kicked off last night with a screening of The White House Effect. This documentary, which is entirely composed of archival footage, examines a political battle during the George H. W. Bush administration that weakened US climate policy as the international community collaborated on reducing greenhouse gas emissions. Another festival highlight is Lowlands Kids (pictured above), a documentary that follows two teenage siblings as they navigate adolescence on Isle de Jean Charles in Louisiana—an island with a population of just over 700 people. Hurricanes, along with erosion that is driven by rising sea levels, are chipping away at the island’s landmass and culture. In total, the festival will screen 42 feature films and 25 short films in theaters across Washington, DC. The festival runs from March 20 to March 29.

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