ACE

Category: Environmental Policy

  • Pros and Cons of Subsidizing Electric Vehicles

    Pros and Cons of Subsidizing Electric Vehicles

    Introduction

    At both the federal and state level, governments in the United States are using policy to increase the use of electric vehicles (EVs) over gas-powered cars. Some of these policies are subsidies in the form of tax credits for those who purchase EVs, while others take the form of mandates without an economic incentive. One example is California’s Zero Emission Vehicle (ZEV) Sales Requirement program, which states that “automakers will have to gradually electrify their fleet of new vehicles, beginning with 35% of 2026 models sold, increasing to 68% in 2030 and 100% for 2035 models.” Transportation currently accounts for 29% of American CO2 emissions, and switching to EVs is one way to reduce transportation’s environmental impact.

    However, the transition to electric vehicles has met resistance. Even though they may be cheaper in the long run, EVs present a higher upfront cost for consumers than gas-powered cars. In addition, most automakers manufacture primarily gas-powered cars, and moving to electric vehicles would incur high costs in research and development as well as new manufacturing processes.

    Arguments in Favor of Subsidizing Electric Vehicles

    Proponents of EV subsidies argue that increased EV use will bring about important environmental benefits. EVs reduce emissions and improve air quality, which would slow the progression of climate change because CO2 is the primary greenhouse gas responsible for global warming. An analysis of the CA ZEV mandate shows that the increased EV use “will result in cumulative avoided health impacts worth nearly $13 billion… [and] in 2040, greenhouse gas emissions from cars, pickups, and SUVs [will be] cut in half.” Electric vehicles are also cheaper for consumers in the long run, as electricity is less expensive than gasoline. In fact, the economic benefits of the mandate are expected to outweigh the costs by approximately $383 billion, more than half of which comes from savings on gas.

    Furthermore, subsidies that incentivize EV use may address consumers’ and companies’ economic concerns about switching to EVs more directly than mandates do. Tax credits for EV purchases alleviate the higher upfront costs of EVs as opposed to gas-powered cars. Furthermore, subsidies can also decrease America’s reliance on foreign manufacturing, a significant concern not only for electric vehicles (EVs) but also for other renewable energy infrastructure, such as solar panels. The Inflation Reduction Act (passed in 2022) includes tax credits for EVs, but contains specifications on where the components must be manufactured in order for the vehicle to qualify. Mandates, on the other hand, usually do not address the higher upfront cost of EVs or increased demand for foreign components. 

    Arguments Against Subsidizing Electric Vehicles

    Critics of EV subsidies point to the potential negative impacts created by these policies, both environmental and economic. An increase in demand for EVs would also cause an increase in the demand for EV batteries. Currently, these batteries require metals such as lithium, nickel, and cobalt, whose mining is very energy-intensive and often leads to high levels of water and air pollution. Additionally, the environmental benefits of EVs are dependent on how the electricity they run on is produced. Current US electric grids mainly use a mixture of renewable and fossil fuel sources. An increase in EV usage would put high demands on the electric grids, prompting concerns about lack of infrastructure to accommodate these demands and how electricity production can be increased. 

    Additionally, even among those who support the transition to EVs, there is disagreement about whether subsidizing EVs is the best way to bring it about. Subsidies have been shown to mostly benefit rich and progressive drivers (with the proportion of EV ownership currently much higher in households which earn over $200,000 per year). This limits the potential benefits since these drivers would tend to buy an EV regardless of tax credits or use more fuel-efficient vehicles and drive less. On the other hand, drivers who tend to use the most gasoline have more average income levels, and as such are less likely to make use of a subsidy such as an EV tax credit. Subsidies for EVs may also have detrimental economic consequences, as they distort the marketplace and may disincentivize American EV manufacturers from innovating or lowering prices. 

    Looking Forward

    Ultimately, the future of EVs will be shaped by both environmental and economic forces. California’s ZEV mandate program will be fully implemented by 2035, and can serve as a model for other states to increase EV use as well. Environmental concerns such as increased warming and air pollution may also influence policymakers and consumers towards EVs. While the economic barrier to EVs is currently higher than for gas-powered cars, increased demand may drive prices down and spur innovation. EVs present their own environmental and economic concerns, but transitioning to more environmentally friendly transportation will soon become a necessity, whether it is achieved through subsidies, mandates, or market forces.

  • Pros and Cons of a Residential Tax Credit for Clean Energy

    Pros and Cons of a Residential Tax Credit for Clean Energy

    Introduction

    The Inflation Reduction Act, passed in 2022, contained many provisions designed to curb the impact of climate change while also addressing economic issues. The main approach to achieving this involves offering residential tax credits for clean energy. These credits enable Americans to get back up to 30% of their expenditure on clean energy upgrades for their homes as a tax credit. This credit applies specifically to the cost of new clean energy equipment, such as solar panels and solar water heaters. Originally part of the Build Back Better Act, these tax credits were incorporated into the Inflation Reduction Act after the former failed to become law.

    Renewable energy is better for both the environment and human health than the continued use of fossil fuels, which have a destructive impact. According to the United Nations, “more than 13 million deaths around the world each year are due to avoidable environmental causes, including air pollution. In 2018, air pollution from fossil fuels caused $2.9 trillion in health and economic costs, about $8 billion a day.” Transitioning to renewable energy will not only improve air quality by reducing pollution but also yield positive economic benefits by reducing the costs associated with pollution.

    However, the process of switching from fossil fuels to renewable energy sources is expensive and labor-intensive. It is estimated that the cost of moving the US power grid from fossil fuels to renewable energy will be approximately $4.5 trillion. The residential tax credits for clean energy create a strong incentive for consumers and businesses to invest in renewable energy technology like solar panels. However, environmentalists and policymakers disagree about whether a tax credit is the best way to bring about widespread use of renewable energy. 

    Arguments in Favor

    Advocates of the policy highlight the benefits of renewable energy as a rationale for introducing residential tax credits. A cost benefit analysis shows that the benefits of reduced CO2 emissions and air pollution far outweigh the monetary cost of the tax credit. In the time since the Inflation Reduction Act was passed, more businesses and consumers have made use of it than originally anticipated, showing it works as an effective incentive. In other words, this tax credit will bring Americans the numerous benefits of reduced fossil fuel use. 

    The tax credit is also predicted to lead to economic development, in line with the goals of the Inflation Reduction Act. The residential tax credit for clean energy is projected to save American households around $5 billion per year by 2024. This credit not only reduces the initial expense of transitioning to renewable energy but also leads to lower electricity expenses because electricity from renewable sources is lower than that of electricity from fossil fuels. Moreover, the growing demand for renewable energy equipment like solar panels will encourage investments and innovation in the renewable energy sector. This, in turn, will stimulate job creation as workers will be required to construct the necessary infrastructure for expanded renewable energy usage.

    Arguments in Opposition

    Opponents of the tax credit argue that the policy could result in economic challenges rather than benefits. A key concern is that a tax credit would incur government expenses, leading to higher spending and an increased deficit, potentially undermining economic stability during an inflation crisis. Additionally, if the tax credit successfully boosts renewable energy adoption, its cost would likely rise—indeed, the current cost has exceeded initial projections. Some also contend that while proponents claim the tax credit will drive economic growth and innovation in the renewable energy sector, the effects of a market-distorting subsidy like a tax credit are often uncertain. It might even discourage innovation among renewable energy companies, as the tax credit alone could create sufficient demand for their products.

    Another criticism is that tax credits are an inequitable way to achieve the goal of a faster transition to renewable energy. A study from the University of Chicago found that tax credits for clean energy have historically disproportionately aided high-income Americans, as “the bottom three income quintiles have received about 10% of all credits [since 2006], while the top quintile has received about 60%.” This is because a lot of Americans don’t have sufficient tax obligations to fully utilize a tax credit. Consequently, many who oppose the tax credit propose a more equitable alternative: residential direct pay. This approach enables beneficiaries to receive a payment equivalent to the tax credit they would have qualified for.

    Looking Forward

    Both positive and negative future developments are expected to come from the residential tax credit for clean energy. Its efficacy in increasing clean energy usage is likely to spur economic development and reduce the costs of renewable energy as demand goes up, thus also leading to a beneficial environmental impact. However, this increased demand will also likely increase American dependence on foreign manufacturing, as solar cells do not need to be American-made in order to qualify for the tax credit, and the majority of the world’s solar cells are currently made in China. Increased demand for solar panels will lead to US consumers buying more solar cells imported from China. 

    The residential tax credit for clean energy is anticipated to bring about both positive and negative outcomes in the future. Its effectiveness in promoting clean energy adoption is expected to drive economic growth and lower renewable energy costs through increased demand, yielding positive environmental effects. Nevertheless, this heightened demand may also lead to greater reliance on foreign manufacturing, particularly from China, since solar cells are not required to be American-made to qualify for the tax credit. As a result, the surge in solar panel demand could lead to increased purchases of imported solar cells from China by American consumers.

    While most policymakers agree that switching to renewable energy will be beneficial for Americans in the long run, there remains debate about whether subsidizing renewable energy with a tax credit is the best way to bring about this switch as opposed to alternatives like residential direct pay or simply allowing market forces to work uninterrupted.

  • US Response to Deforestation in the Congo Basin

    US Response to Deforestation in the Congo Basin

    The Congo Basin spans six Central African countries: Cameroon, Central African Republic, Democratic Republic of the Congo, Equatorial Guinea, Gabon and Republic of the Congo. The basin is home to the world’s second largest rainforest, measuring 500 million acres, and hundreds of thousands of local species. In the past decade, however, the rainforest has faced the encroaching threat of commercial agriculture and resource exploitation. Since 2013, expansion in commercial agriculture and the logging industry throughout Africa has destroyed thousands of acres of forest.

    Most of this agro conversion is done illegally, as companies fail to obtain the proper license or blatantly violate allotted boundaries and other legislation. For example, the European company Norsudtimber has illegal logging sites throughout 40,000 square kilometers of rainforest. The new farmland and extraction sites are mainly a result of a high global demand for valuable natural resources. Companies harvest palm oil and rubber or oil from the 16 blocs located throughout the forested region. Further exacerbating the uncontrolled deforestation is a lack of local government capacity, especially in terms of financial resources or incentives to adequately protect their forests. The combined demand for resources and lack of an effective counter to illegal practices has led to a steady increase in deforestation.

    Deforestation and Climate Change

    Deforestation in the Congo Basin goes beyond the scope of Central Africa as it ties into the larger issue of global climate change. The destruction of tropical forests affects global warming because the various trees and vegetation remove carbon from the atmosphere through a process known as sequestration. Deforestation releases carbon back into the atmosphere and limits the potential for further reabsorption. If global deforestation persists at its current rate, the resulting emissions will use up nearly 20% of the emissions budget established in the Paris Agreement. 

    The effects of deforestation and the resulting expedited global warming has already started to impact Americans in tangible ways. Most recently, much of the East Coast was subjected to dangerous air quality as a result of Canadian wildfires. These wildfires are enhanced by the drier climate created through global warming. As wildfires increase in size and severity, they expedite emissions and further the global warming process to create a dangerous cycle.

    The Current Approach

    In 2021, President Biden released an executive order about combating climate change that led to The Plan to Conserve Global Forests: Critical Carbon Sinks. This plan emphasizes an economic approach to preventing deforestation through methods of increasing investment in conservationist programs and offering “debt-for-nature swaps.” These “swaps” allow nations indebted to the United States to instead redirect that money towards conservation. 

    The Biden Administration has identified climate change, including the specific concern of deforestation, as significant threats to the US. The administration is actively taking measures to tackle this problem. For example, Biden signed onto a joint donor statement with several other countries and the Bezos’ Earth Fund to pledge $1.5 billion between 2021-2025 towards protecting the Congo Basin forests. Since then, in 2022, Biden released an executive order outlining his administration’s goals on preventing deforestation both locally and internationally as a protection against climate change and other environmental issues. As part of this order, Biden tasked his cabinet with creating a proposed plan of action around illegal production on deforested lands, including working with local governments on enforcing forest-protecting law. These steps represent a foreign policy focused on monetary aid towards eliminating deforestation and a direct acknowledgement of the situation within the Congo Basin.

    Extent of Involvement

    Some argue that the current aid and actions taken by the US to combat deforestation in the Congo Basin are enough. One concern about increasing involvement is the associated cost. The US Agency for International Development (USAID) recognizes the substantial financial and time commitment required for analysis before allocating more aid. Considering the significant financial support already provided by the US, it’s unclear if additional funding is necessary. Apart from financial aid, the US Forest Service collaborates with universities and NGOs in Congo Basin countries to establish an institutional approach to forest conservation. This type of support primarily aims to empower these countries to address deforestation internally. This raises the question of whether working at the national level is sufficient or if the US should take a more direct role.

    An alternative approach to the issue is for the US and local governments to rely on the indigenous communities to regulate the forests instead of getting involved themselves. In 2018, the DRC granted the Nkala people the right to govern a portion of the rainforest, and since then the territory has seen a diversification in crops, improved protection against extreme weather, and general sustainability. These systems do not, however, address the issue of resource demand and weak government protection for those indigenous communities.

    Increasing Aid

    The Interfaith Rainforest Initiative provides an argument for greater direct involvement. While the present deforestation emissions are minor, they contribute to 8% of global greenhouse gas emissions when considering forest regrowth. Halting deforestation and promoting reforestation could potentially cut global emissions by over 30%. This is because the approach prevents emissions and allows for more CO2 removal as new forests grow. These findings justify the call for greater US engagement, not only to reduce emissions but also to initiate a reversal of the climate change trend.

    One possible way to get involved is by establishing trade guidelines. Trade historically has worked as a means to promote American international interests such as the Environmental Cooperation Agreement within the US’s Free Trade Agreement with Peru. Whether it is creating a fleshed out trade agreement with environmental provisions or just creating more guidelines to prevent the trade/resell of materials illegally extracted from deforestation, the US can take a stronger commercial policy stance.

    Environmentalists and other individuals with strong demands for increased involvement see a need for more direct approaches, such as increasing USAID funding to promote donations towards combating deforestation. As of April 2023, USAID’s Central Africa Regional Program for the Environment (CARPE) has already invested more than $600 million to tackle the many components of the deforestation issue. Biden’s budget proposal looks to increase funding for USAID and directly financially support African nations in conservationist measures. 

    Decreasing Aid and Other Alternatives

    Some are vehemently opposed to Biden’s foreign aid budget as part of an alternative spending plan. Some individuals aim to reduce spending and trim the government budget to address the debt crisis. This approach involves cutting areas considered less essential. For some, providing financial assistance to the Congo Basin might be seen as a potentially unnecessary expense. Some individuals view providing financial aid to the Congo Basin as potentially unnecessary. This perspective is partly rooted in concerns about corruption and inefficient use of US contributions, particularly in the Democratic Republic of Congo (DRC). Funds acquired through the Central African Forest Initiative (CAFI) are not directly given to the Congolese government due to corruption fears. Nevertheless, the DRC’s environmental minister has highlighted the significant loss of funds to administrative expenses under the existing system. Given this unclear monetary aid setup, those against involvement in the region contend that it may not be worthwhile.

    In addition, some argue that deforestation within the Congo Basin is beneficial because of the many resources produced from the newly opened areas. The US could benefit from the resources procured through increased mining projects such as oil and cobalt. The US government’s trade profile on the DRC labels the country as “in a strategic position for the energy transition” because of its “substantial untapped gold, cobalt, and high-grade copper reserves.” Some believe the US stands to gain large quantities of critical minerals if it invests in future mining projects rather than preventing deforestation in the Congo Basin. 

    Beyond the US gains, the Environmental Kuznets Curve (EKC) shows that countries in early development stages are expected to see large jumps in carbon emissions. The rise in deforestation within Central Africa follows the initial part of the EKC. All the while, if Congo Basin countries transitions towards manufacturing over agriculture (part of the developing progression), then deforestation is predicted to decrease.  Deforestation may be a temporary and necessary part of Central African development. In fact, members of the Global South have expressed resentment towards the more industrialized nations’ supposed environmentalist stance because the countries promoting environmental protections within Africa are the same nations who historically exploited natural resources to reach their current standing. 

    The issue of deforestation within the Congo Basin is multifaceted with environmental, financial, and political concerns combining to reach a range of conclusions around how involved the US should really be. Within the US, addressing climate change is now a priority for 52% of voters. With that being said, people disagree if the Congo Basin is the best avenue for combating climate change. 

  • Pros and Cons of Expanding Wildfire-Resistant Housing Initiatives

    Pros and Cons of Expanding Wildfire-Resistant Housing Initiatives

    California Assembly Bill 38, signed into law by Governor Newsom in 2019, addresses the issue of home fire safety by enhancing the resilience of housing communities located in high fire severity zones. AB-38 requires the Office of Emergency Services (Cal OES) and the Department of Forestry and Fire Protection (CAL FIRE) to develop and administer a home hardening initiative to retrofit and create defensible space for homes in environmentally and socially vulnerable communities.

    AB-38 also specifies the prioritization of home hardening in communities made further vulnerable due to factors such as age, health, and mobility. Financial assistance—up to $40,000 per home—is also available for low- and moderate-income residents in such communities. San Diego, Shasta, and Lake Counties in Southern California were prioritized as pilot areas for this program.

    Current Wildfire-Resilience Policies & Allocation

    The current policies and allocation of funds by the California government to address the threat of wildfires on housing primarily focus on coniferous forest management rather than home hardening measures. For instance, the Wildfire and Forest Resilience Plan for 2023-2024 includes an allocated budget of $12 million for home hardening, $5 million for defensible space initiatives, and $192 million for wildfire fuel breaks in coniferous forests. However, the popularity of home hardening is on the rise, as new studies show that 86% of building losses caused by wildfires in California occur within areas designated as the wildlife-urban interface (WUI). The WUI is the zone of transition between unoccupied land and human development, and pilot communities such as Dulzura are designated as both high fire hazard zones and as part of California’s WUI. 

    Arguments in Favor of Expanding Home Hardening Initiatives

    Advocates for the expansion of state-sponsored home hardening initiatives cite the promotion of equitable climate justice for underprivileged communities. The individual cost of implementation for different home hardening tactics poses a significant financial burden, especially for homeowners with limited resources. Low-income Americans already bear a disproportionate burden when dealing with the effects of extreme weather events, as underprivileged populations are more likely to seek housing that is more affordable, and thus riskier. Legislation such as AB-38 will help locals who may not be able to afford fire-resistant restorations without outside financial assistance.

    To establish affordable home hardening programs, the state would have to bear upfront costs. Proponents believe that the benefits of upfront investment outweigh the potential costs of fire damage in highly vulnerable areas. Given that the financial assistance program mandated by AB-38 was written largely in response to the devastation of the 2018 Camp Fire in Northern California, proponents of the legislation cite the $18-billion cost in damages caused by the Camp Fire as impetus for home hardening. The migration of residents from high-risk areas exacerbates the housing affordability crisis, underscoring the need for innovative climate adaptation planning.

    Finally, home hardening not only protects homes and residents, but also safeguards firefighters and first responders by reducing the risk of homes becoming ignition sources. Additionally, if homes are more immune to ignition, firefighters can focus on containing and extinguishing wildfires, leading to improved overall efforts.

    Critiques Against Expanding Home Hardening Initiatives

    While there is general consensus on the need for stronger structures in the face of exacerbated climate change, critics argue that home-hardening initiatives like retrofitting are not as effective as allowing developers to construct new, higher-quality housing in the WUI. Given advancements in building codes and materials, it is easier to incorporate resilience measures during the construction process, as upgrading existing infrastructure entails working within the limitations of that infrastructure. Developers advocate for building new, climate-resilient housing in the WUI in place of older houses that require home hardening.

    In addition to concerns about retrofitting, critics highlight the unintended consequences that defensible space requirements may have on the natural environment. Defensible space and extensive vegetation removal can disrupt ecosystems, potentially leading to ecosystem imbalance or loss of habitat for wildlife.

    Furthermore, though legislation such as AB-38 is meant to make fire-resilient housing more accessible, there is no guarantee that homeowners will comply with the optional home hardening procedures. Enforcing home hardening requirements can be challenging, particularly in cases where homeowners fail to maintain their properties adequately, prompting the need for additional resource-intensive inspections and monitoring.

    Climate Adaptation & Future Developments

    The expansion of home hardening initiatives reflects a shift in focus within legislation towards adapting to the changing environment rather than solely mitigating its effects. Adaptation itself has become a contentious topic. Proponents of wildfire-adaptive legislation argue that it is a necessary response to the foreseeable effects of climate change, and that the allocation of government funds towards fire resilience should move away from prevention strategies that involve logging or cutting down forests and instead endorse adaptation measures. On the other hand, too heavy of an emphasis on adaptation may divert attention away from the impetus to prevent further environmental degradation. Critics argue that focusing legislation on home hardening rather than prioritizing actions such as imposing sanctions on large corporations that exacerbate climate change may be self-serving on the part of the government.

    The pilot program will commence in the summer of 2023, with Dulzura being the first community to start implementing adaptive housing measures. The program will expand to the communities of Potrero during the fall of 2023, and Campo during the fall of 2024. As home hardening measures are further implemented across California, officials will have a better understanding about how adaptation efforts will shape climate resilience, and whether other counties will follow San Diego’s lead in implementing similar measures.

  • Understanding Critical Resource Extraction in the Arctic

    Understanding Critical Resource Extraction in the Arctic

    The Arctic Region

    The Arctic is the northernmost region of the Earth, centered on the North Pole. Most scientists define the Arctic as the area within the Arctic Circle, a line of latitude approximately 66.5° north of the Equator. The Arctic is home to more than 4 million people, including indigenous people such as the Saami, Aleut, and Yupik. The harsh climate and sparse population of the Arctic limited economic development until the impacts of climate change began to transform the environment. The effects of climate change in the Arctic are sobering. Scientists estimate the Arctic region is warming 4 times faster than the lower latitudes. The Arctic Report Card from the National Oceanic and Atmospheric Administration warns that climate change is transforming the Arctic dramatically.

    Climate Change Makes Critical Resource Extraction Possible

    As the permafrost of the Arctic region softens and the ice that normally covers the Arctic sea melts, it has become more feasible to access the resources of the Arctic. Currently, oil, natural gas, and coal are being extracted in the Arctic. The Arctic States are all signatories to the Paris Agreement, which seeks to reduce greenhouse gas emissions. To achieve the goals of the Paris Agreement, governments are supporting efforts to transition from fossil fuels to renewable energy sources. Renewable energy technologies run on critical minerals. The US Geological Survey has listed 50 critical minerals necessary to the renewable energy, technology, medical, and defense sectors. 

    Minerals include lithium and manganese, used in electric batteries, and tellurium, used in solar panels. The International Energy Agency projects that critical mineral demand will rise 6 times the current level by 2040. Many critical minerals are located in the Arctic. Although Arctic resources have many potential benefits, resource extraction in the Arctic can pose threats to indigenous people and the environment, disrupting cultures and ecosystems. The United Nations is working to mitigate those threats with an initiative called Protection of the Arctic Marine Environment by limiting marine litter and encouraging sustainable tourism and economic development in the region. 

    The American Arctic

    The state of Alaska is located in the Arctic, and geologists believe Alaska has deposits of 49 critical minerals. The Biden Administration published the National Strategy for the Arctic Region, which focuses on security, critical resources, climate, and society in the American Arctic. On March 13, 2023, President Biden authorized Conoco-Philips to drill for oil on land leased from the Federal Government. The Willow Project, located on the North Slope of Alaska, drew attention from Americans concerned about the environmental consequences of oil and gas extraction in Alaska. More than 5 million people signed a petition circulated by change.org to urge President Biden to halt the project. Senator Lisa Murkowski of Alaska defended the project, and cited its potential for creating jobs for Native Alaskans.

    The Canadian Arctic 

    Nearly 40% of Canada’s territory is in the Arctic. The Canadian Arctic is rich in natural resources, including critical minerals and vast uranium deposits which can help increase nuclear energy to replace electricity generated by fossil fuels. The Canadian government produced a comprehensive critical mineral strategy and provided funding to support critical minerals projects. Together with its allies, Canada is committed to meeting the goals of the Paris Agreement and to mining the Arctic sustainably. 

    The European Arctic

    The European Arctic States, along with the European Union, are planning to increase mining, shipping, and fishing activity in the Arctic to meet their climate and security goals. It is estimated that Greenland has 25% of the global reserves of critical minerals. In January 2023, LKAB, a Swedish mining company, announced it had discovered Europe’s largest deposit of critical minerals in Kiruna, Sweden. The European Union proposed the Critical Raw Materials Act to expedite critical minerals mining. Increased mining activity in the European Arctic has been criticized by the Saami, an indigenous population in the region, who fear it will disrupt their way of life. The University of Queensland in Australia developed an online tool to respond to these concerns and gather input on Arctic resource extraction from indigenous people, community leaders, scholars, and industry practitioners. 

    The United States and Allies Share Values and Goals in the Arctic

    New European Union Regulatory regimes like the Just Transition Fund, EU and the Critical Raw Materials Act help protect the environment and indigenous communities in the Arctic. Josep Borell, the High Representative of the Union for Foreign Affairs and Security Policy, the European Union’s counterpart to the Secretary of State of the United States, stated, “The impact of climate change, security issues, and rivalries are growing in the Arctic regions. So is the need for cooperation and multilateral agreements.” Similarly, the US Arctic Strategy emphasizes the need to uphold international law and norms in the Arctic. The United States’ security framework in the Arctic helps the European Union and NATO achieve security in the region. Finally, the EU-Canada recent agreement on securing critical mineral supply chains supports developing critical raw material projects in Canada and the EU. It aligns European and Canadian financial support for critical mineral projects to leverage and de-risk private investments. Although some citizens have objected to resource extraction in the Arctic, the United States and its allies are partnering with private industry to speed extraction of rare earth elements, minimize environmental impact, and protect indigenous citizens. The growing importance of the Arctic is an example of how climate change is impacting foreign policy and necessitating closer cooperation between the United States, Canada, and the European Union to reduce harm to the region caused by climate change and increased activity.

  • Understanding the Hazardous Air Pollution Debate

    Understanding the Hazardous Air Pollution Debate

    Background 

    Hazardous air pollution (HAP) is the contamination of the air by toxic pollutants that can cause serious health effects at high levels of concentration or exposure. While some release of HAPs can occur naturally, such as from forest fires, most comes from human activity and man-made sources. The largest sources are called stationary sources. These are mostly industry-related, consisting of fossil fuel-based power plants, factories, refineries, boilers, chemical manufacturing facilities, and steel mills. Mobile sources are also large HAP contributors. These include motor vehicles like cars, buses, and trucks, their fuels, and tailpipe emissions.  Additionally, indoor sources like chemical solvents, tobacco smoking, compounds like asbestos in building materials, and cleaning activities release large quantities of toxins into the air.

    Generally, HAPs can be divided into 3 categories:

    1. Gasses, like hydrogen chloride and substances found in gasoline, 
    2. Particles, such as mercury, lead compounds, and other heavy metals, and 
    3. Liquid aerosols, which include dry cleaning agents and industrial solvents.  

    Exposure and health effects 

    The primary mode of exposure to HAPs is through the inhalation of polluted air. However, exposure from secondary sources also contributes to human health effects. Toxins can enter the body from consuming contaminated food, water, and soil. Exposure can happen over short periods in peaks, such as through episodic events like wildfires or seasonal bouts of air pollution, or over extended periods like multiple years of living in the same place with a low level of exposure. Studies are currently looking into the potential cumulative increases in risk, but have found that long-term or chronic HAP exposure leads to more severe impacts. New research has also shown that mixed exposures, like particulate matter and ozone combined, have even greater health outcomes than individual exposures. The levels of exposure that can be deemed safe or not as severe vary by pollutant, though some toxins have no minimum thresholds below which adverse effects will not arise.

    Exposure to HAPs over long periods of time leads to the development of a variety of serious health effects, most seriously being reduced life expectancy or premature death. This depends on several factors such as the duration and frequency of exposure, level of toxicity of the HAP, and previous health status of the exposed individual. Young children and infants, pregnant people, and the elderly are generally considered to be the most vulnerable baseline populations at risk for diseases from HAP. Underlying health issues, poor nutrition, and stress can also all weaken the body’s immune system and make someone more susceptible to worse effects from HAP exposure. 

    HAP can lead to health issues like various forms of cancer (lung, throat, mouth, kidney, stomach, bone), coughing, difficulty breathing, asthma, irritation of eyes, breathing passages, and skin, pneumonia, nausea, and blood and liver abnormalities. It can also increase someone’s risk of stroke and heart attacks, while causing damage to the respiratory, nervous, cardiovascular, and reproductive systems. HAP exposure has also been linked with infertility and adverse pregnancy outcomes, such as preterm birth, birth defects, low weight, and neurological developmental impairments of babies. In addition to directly causing the development of such health issues, HAP can leave people weakened to fight other diseases and infections. 

    People living in urban areas or in locations near industrial facilities face the greatest risk of health effects from HAP exposure. They suffer from a higher concentration of air quality-degrading sources, particularly from road emissions and industrial accidents. Studies have found that the more urban an area becomes, the lower the air quality becomes from HAP exposure. Additionally, low-income people and people of color are most likely to live near industrial areas and are exposed to toxic air pollutants at higher rates. In the US, people of color are 3.6 times more likely than white people to live in places with unhealthy levels of air pollution. Socioeconomic and health inequities such as limited access to healthcare also exacerbate the effects of HAP for these communities. 

    Environmental effects 

    The build-up of pollutants in the air and atmosphere contributes to issues like climate change and biodiversity degradation. The release of HAPs from various human activities traps heat in the atmosphere. Consequences from this ensuing global atmospheric change include temperature alterations, rising sea levels, ocean acidification, increased flooding, and intensified storms. 

    HAP contamination of air and waterways has also been linked to the impairment of biological processes in species, like immune function and reproduction, the disruption of crucial steps in the water cycle such as condensation and evaporation, and interference with other natural processes in ecosystems. The deterioration of soil nutrient health, accumulation of toxins in food chains, and direct damage to plants and animals also affect forest health and overall longevity of ecosystem and species population longevity. 

    Reducing emissions and the role of government 

    Mitigating HAP largely involves reducing emissions of toxins in the three major sources categories: mobile, stationary, and indoor. The government primarily targets these areas of concern through legislative measures with federal enforcement, such as by implementing strict emissions standards and penalties for noncompliance. Local initiatives and voluntary programs also exist to address emission reduction on a smaller scale. 

    Most federal regulation of air pollution falls under the Environmental Protection Agency (EPA). Since its establishment in 1970, levels of air pollution in the US have decreased substantially, though they still remain at unhealthy concentrations. To mitigate this, the EPA has initiated numerous legislative efforts, like setting regularly updated standards for pollutants. In one example, the EPA established the Air Quality Index (AQI), a guide for determining air quality in the US. With differing values that represent levels of concentration of HAPs and potential health concerns, the AQI helps identify which pollutants need to be most imminently reduced. 

    The Clean Air Act (CAA) (1963) is the primary piece of federal legislation on air quality, and serves as the legal basis for EPA regulations reducing air pollution. The National Ambient Air Quality Standards (NAAQS), which determine allowable atmospheric levels of six criteria pollutants: carbon monoxide, nitrogen dioxide, sulfur dioxide, ground-level ozone, lead, and particle matter. These toxins were the first to be recognized as in need of national standards by the EPA. The NAAQS are health-based and split into two types: primary and secondary. Primary standards focus on protecting public health, and secondary standards focus on protecting public welfare, including the environment. For both types, standards for the six HAPs are revised every 5 years in a process that reviews the scientific backing behind each standard and the standards themselves.

    The CAA also sets the National Emission Standards for Hazardous Air Pollutants (NESHAP), which codified its list of 187 air pollutants officially designated as HAPs in a major 1990 amendment. These are all pollutants not included in the NAAQS that are still considered the greatest threats to air quality and public health, such as formaldehyde and lead, and they have limits set by the NESHAP. Under this criteria, the EPA regulates emissions from pollutants on the list in a two-phase plan, beginning with technology-based standards targeting industry sources and following with additional risk-based standards if needed. While the list is expansive and has changed throughout the years, it is not all-encompassing—pollutants not included on the list may also pose health risks. 

    Moving forward: results and critiques 

    Major debates surrounding HAP mostly involve regulatory practices and challenges to pieces of legislation. Since its passing in 1970, the CAA has lowered emission levels of the six criteria pollutants by 78%. This has led to widespread public health benefits, such as extended life expectancy, reduced risk of cancer and lung-related diseases. Between 1970 and 2020, HAP regulations are estimated to have prevented 230,000 premature deaths from air pollution, in addition to almost 2.5 million asthma complications and 135,000 HAP-related hospital visits. Since 1991, all 41 areas across the country that faced toxic levels of carbon monoxide concentrations also now meet health standards and continue to improve on a yearly basis.

    Nonetheless, the act has been subject to critique. One concern is that the CAA is expensive and its cumulative costs are underestimated. In 2020 alone, the economic benefits associated with preventing premature deaths from air pollution was estimated at $2 trillion, compared to implementation costs of $65 billion. Reduced ecological damage from HAPs has also benefited the agricultural sector; less soil nutritional damage leads to greater and healthier crop yields, which has an estimated cost of $5.5 billion in benefits.

    Other critiques concerning harm to the nation’s economy come from states and utilities, who seek greater leeway in regulation and argue that the agency’s powers are too expansive. In one example, state leaders may oppose air control regulation that, if unfollowed, may cost a state its federal funding for highways—even if pollutants can cross over state-lines from other parts of the country. Industries like motor vehicle and power companies have also challenged EPA emission standards in court, claiming that regulations were too stringent.

    Conclusion

    As hazardous air pollution persists from man-made sources like fossil fuel-based industrial facilities and vehicles, toxic pollutants continue to pose significant challenges to the environment and human health. Significant progress has been made thanks to legislative measures like the CAA, which has decreased the levels of a range of pollutants, prevented widespread health consequences, and saved trillions of dollars. But while air pollution has decreased in the past several decades, work still remains to be done. 4 in 10 Americans still live in regions with toxic levels of pollutants, and marginalized communities remain disproportionately affected.

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  • Understanding the Pesticide Debate

    Understanding the Pesticide Debate

    Pesticides are chemicals that target and kill organisms which humans have deemed as harmful. Pesticide is a generalized term for many different types of chemicals including herbicides, insecticides, and fungicides. These chemicals must be registered with the Environmental Protection Agency (EPA) in order to be used. This process entails examining their ingredients, which crop they will be used to protect, amount and frequency of use, and storage and disposal. 

    The five major legislations that regulate pesticide use: 

    1. The Federal Insecticide, Fungicide, and Rodenticide Act: requires all pesticides sold and distributed in the United States (including imported pesticides) to be registered by the EPA.
    2. The Federal Food, Drug and Cosmetic Act: requires the EPA to set pesticide tolerances for all pesticides used in or on food or in a manner that will result in a residue in or on food or animal feed. A tolerance is the maximum permissible level for pesticide residues allowed in or on human food and animal feed.
    3. Food Quality Protection Act: this act amended both FIFRA and FFDCA. The EPA must find that a pesticide poses a “reasonable certainty of no harm” before it can be registered for use on food or feed. Each pesticide registration must be reviewed at least once every 15 years.
    4. Pesticide Registration Improvement Act: companies must pay service fees according to the category of their registration. Shorter decision review periods are provided for reduced-risk registration applications. 
    5. The Endangered Species Act: requires federal agencies to ensure that any action they authorize, fund, or carry out, will not likely jeopardize the continued existence of any listed species, or destroy or adversely modify any critical habitat for those species. All pesticide products that EPA determines “may affect” a listed species or its designated critical habitat may be subject to EPA’s Endangered Species Protection Program.

    Origins of the Pesticide Debate

    The pesticide debate first entered the national consciousness thanks to marine biologist and writer Rachel Carson in 1962, when she published her book Silent Spring that focused on the negative effects of DDT, an insecticide. Attention was drawn to DDT because of its effects on bird populations. DDT disturbed endocrine functions in birds which led to eggshell thinning in impacted birds. DDT also caused adult birds to lose control of their nerves and muscles. Concerns over DDT’s adverse effects on the environment and potential harm to humans led to the EPA banning it in 1972. After the breakout success of Silent Spring, Supreme Court Justice William O. Douglas described pesticides as “sinister and little-recognized partners of radiation in changing the very nature of the world.” Carson argued that chemicals “work unknown harm” through their “contamination of air, earth, rivers, and sea with dangerous and even lethal materials”.

    A recent study by Pew Research surveyed public opinions on the safety of fruit and vegetables grown with pesticides. Only 26% of those surveyed responded that they believed pesticides were safe, while 48% thought they were unsafe. Those most negatively affected by the effects of pesticide spraying are agricultural workers. On the other hand, produce and chemical industries greatly benefit from the use of pesticides. The process of deciding the risk versus return of using pesticides is a nuanced decision. A complete appraisal of the social costs and benefits needs to be understood to find the largest net gains to society.

    In Favor of Strong Pesticide Regulation

    Arguments in favor of increasing pesticide regulation cite the negative effects that have been observed on the environment. Pesticides can’t be completely specialized, meaning that they often also have negative effects on non-target organisms. This leads to the removal of species which are beneficial to the crop, which is counter productive towards the goal of increased yield. Pesticides also bioaccumulate and biomagnify which can destabilize the food chain. Bioaccumulation is when the concentration of a toxin accumulates in a species faster than the organism can eliminate it, and biomagnification is the tendency for toxic substances to be found in greater quantities in organisms higher up the food chain as they consume many smaller organisms with small amounts of toxins. The effects of pesticides on many species are prevalent; for example it is estimated that around 10% of birds exposed to pesticides on U.S agricultural lands die from the exposure. A study in the Indian Journal of Microbiology found heavy use of pesticides has also been found to decrease the fertility of soil which can take several years to recover. 

    A second key argument in favor of stricter pesticide regulation cites the adverse effects pesticides have on human health. It was found that 98-99% of Americans carried in them residues of dieldrin in low concentration. Similarly to how pesticides bioaccumulate in the food chain, they also accumulate in our bodies. Regular exposure builds up each day which can eventually lead to hospitalization or even death. Some argue that farmers can implement tactics that naturally reduce loss of crops from pests rather than utilizing primarily pesticides. Natural enemies of pests are just as susceptible to pesticides as the target species. By implementing integrated pest management, a mix of biological and chemical controls, target species will be more efficiently removed with less pesticide spray required. For this to work though, understanding the placement of pesticide spray and the susceptible life stages of natural predators is vital. Vertical farming is a new type of farming where crops can be grown in an urban biosecure environment free from pests. This style of farming has zero need for pesticides, reduces water usage, and greenhouse gas emissions. In the future these tactics could be vital to the survival of the agriculture industry.

    In Opposition to Stronger Regulation

    Those in opposition to stronger pesticide regulation claim that they are the basis of cost-effective farming. The use of herbicides has led to a decrease of manual farm work, reducing labor costs and the overall cost of food for consumers. When used properly, they also improve crop yields, leading to greater accessibility and food security. In the United States, farm production loses the equivalent of thirty percent of sales to pests each year. By reducing the amount of pests that feed on plants, huge quantities of food can be preserved. The growing population of the Earth requires increasing food production, which necessitates the use of pesticides to ensure maximum crop yields. The population of the world doubled from 1950-2000, which meant agriculture had to increase production accordingly. This has led to a rapid increase in pesticide use. Without the use of pesticides it is estimated there would be a 78% loss of fruit production, a 54% loss of vegetable production, and 32% loss of cereal products. Even with the use of pesticides 30% of world-wide yield is still lost.

  • The Inflation Reduction Act of 2022 and US-EU Relations

    The Inflation Reduction Act of 2022 and US-EU Relations

    The Inflation Reduction Act 

    The Inflation Reduction Act of 2022 (IRA) was signed by President Joe Biden on August 16, 2022. The bill was designed to reduce US dependence on fossil fuels in the transportation and manufacturing sectors. It will also create clean energy jobs, and is projected to create up to 9 million jobs by 2030. 

    Consumer spending on gasoline and energy has risen sharply since 2016. The IRA reduces transportation costs for Americans by offering incentives to consumers and businesses to purchase electric and hydrogen-powered vehicles. Under the law, citizens can claim tax credits of up to $7500 for the purchase of electric and hydrogen-powered vehicles. Vehicles and citizens must meet certain requirements to qualify for the full credit, including:

    • 50% of battery components must be assembled in North America. 
    • 40% of critical raw materials used to make the electric battery must be extracted in the United States or a country with which the US has a trade agreement. 
    • Single filers must have an annual modified adjusted gross income of less than $150,000, or $300,000 for married couples filing jointly. 

    In addition to incentives for consumers, the IRA provides $1 billion to fund zero-emission buses, trucks, and other commercial and government-owned vehicles. Reducing greenhouse gas emissions by 2030 helps the United States achieve the objectives of the Paris Agreement, an international treaty created to limit global warming to less than 2°C, which it formally rejoined in January 2021. The European Union and its twenty-seven Member States also signed the Paris Agreement. To meet the goals of the Paris Agreement, the European Union created The EU Green Deal. With the United States and the European Union both committed to reducing greenhouse gas emissions, leaders were optimistic that the relationship between the European Union and the United States would be strengthened. 

    European Response

    To meet the Biden Administration’s Buy American guidelines, the IRA limits tax credits for hydrogen-powered and electric vehicles to those that have final assembly in North America. European leaders expressed concern that the IRA would have a negative impact on EU automobile and auto parts makers. Germany, France, and Italy have significant auto industries and economists predicted job losses if automakers relocate some of their operations to North America to take advantage of the IRA’s generous subsidies.

    Auto industry leaders appealed to the EU Commissioner for the Internal Market, Thierry Breton, to raise their concerns with the Commission and the Biden Administration. President Emmanuel Macron of France traveled to the United States in late November to discuss the matter directly with President Biden. Biden committed to try to “tweak” the IRA to be more inclusive of European automakers. Breton also began to challenge the European Commission to act quickly to modify its internal market rules to protect the automotive sector in Europe. Commissioner Margrethe Vestager, who protects the level playing field of the Single Market, expressed concern about matching US subsidies. She ensures compliance with State Aid rules contained in the Treaty on the Functioning of the European Union. Articles 107-108 of the treaty specifically address State Aid. Public subsidy of industry by an individual Member State can incentivize businesses to relocate to Member States that provide subsidies, either in the form of funding, favorable taxation, or other means. Subsidies can potentially cause tension among Members and weaken the European Union. State aid disproportionately harms Member States with smaller economies that are not capable of providing direct funding or foregoing tax revenues, so aid that disrupts competition is prohibited. Although it is common practice in the United States for local and state governments to offer incentives to industry to relocate, it is prohibited in the European Union. The European Union is not a federal government. It is a supranational government whose members are independent countries. If Member States fail to cooperate and honor the treaties of the European Union, there is a risk of fragmentation of the Union. 

    Breton, Vestager, leaders of Member States, and industry representatives agreed the European Union needed a response to the IRA; however, they disagreed about what form that response should take. Proposals from Breton, Macron, and German Chancellor Olaf Scholz strongly favored creating EU funded subsidies and allowing Member States to extend national subsidies to industry. Commissioner Vestager and Dutch Prime Minister Mark Rutte expressed the concerns of 11 smaller Member States who opposed relaxing State Aid rules, arguing subsidies could place them at a disadvantage within the European market. The European Union has a complex decision-making process, which makes rapid policy responses difficult. In the United States, Congress can quickly propose laws and pass legislation, as it did in the case of the IRA, which was announced on July 27, 2022, and signed into law on August 16. In contrast, the Green Industrial Plan designed by the European Commission was not proposed until nearly six months after the IRA went into effect. It will accelerate the transformation of Europe’s automotive manufacturing network by speeding up regulatory decision-making. 

    Some IRA provisions had unintended consequences for the European Union and its relationship with the United States. Initially welcomed by EU leaders as a positive step toward meaningful climate action, business leaders quickly identified subsidies that could harm European manufacturers. The fear of European job losses strained US-EU relations. The IRA also caused disagreement among Commissioners and Member States about how to design and finance its own subsidy plan. Commission President Ursula Von Der Leyen urged compromise and maintaining good relations with the United States. 

    Common Goals, Aligned Actions

    Leaders of the European Union and the United States have relied on their strong relationship and shared values to reach limited compromises on the interpretation of the IRA. On December 29, 2022, the United States Department of Treasury announced that Americans will be able to use the IRA tax credit to lease electric and hydrogen-powered vehicles from European automakers. The U.S. Department of Energy created an online tool that allows taxpayers to verify where an automobile was assembled to ensure they can claim the credit. American policymakers continue to review the law and adjust the tools as they refine their interpretations of it. The law may benefit European automakers who have North American assembly plants and provide American consumers with more choices. Finally, talks between US and EU leaders about the IRA have prompted increased dialogue among leaders to coordinate efforts to combat climate change by reducing dependence on fossil fuels. Comprehensive, coordinated policies like the IRA and the Green Deal Industrial Plan help the US and the EU work together to achieve their shared climate goals.

  • US Involvement in the Lithium Triangle

    US Involvement in the Lithium Triangle

    Lithium, also known as white gold, is an important component in rechargeable batteries. These batteries are used in portable technology such as cell phones and laptops, as well as large scale electrical components. Specifically, Lithium-ion batteries store energy for solar panels, electric vehicles, and wind turbines making the resource essential for shifting away from fossil fuels. As a result, demand for lithium is on the rise, and the global consumption of lithium increased by over 40% in 2022.

    Lithium is mostly extracted from brine lake deposits or salares, as these locations have the highest concentration of the mineral. While there are several salares in the United States, the most lithium-rich salares are in Bolivia, Chile, and Argentina. In fact, the overlapping area between these countries is home to over half of the world’s lithium, garnering this region the title of the “Lithium Triangle.”

    The US has several domestic lithium projects such as Abermale’s mine in Silver Peak Nevada or Lithium Americas’ upcoming Thacker Pass mine on the Oregon-Nevada border. Even so, these mines cannot match domestic demand, hence why the US has already started working with Lithium Triangle nations and imported over 90% of its lithium from Argentina and Chile between 2016-2019. 

    Demand for Clean Energy and Lithium

    The Biden Administration recently passed legislation investing in clean energy and the lithium industry. The Bipartisan Infrastructure Law included an emphasis on electrical vehicles and clean energy technologies. Specifically, the deal contained a $65 billion investment in innovations within the sphere of clean energy as part of the overall goal to become a zero-emissions economy. The following year the administration passed the Inflation Reduction Act which provided funding to domestic-based clean energy projects and battery production. These two bills represent a conscious effort to enhance US energy production, thus requiring more lithium.

    Several Republicans are skeptical of the Inflation Reduction Act, claiming that the subsidies for battery production would end up supporting Chinese companies. Republican Frank Lucas wrote a letter to the Department of Energy questioning a grant for Microvast, a company with Chinese ties. These concerns highlight the larger issue of competing with China for control of the lithium industry.

    Competition with China 

    China is the US’s main rival in lithium battery technologies, as well as the electric vehicle sector. In a recent speech, Secretary of State Antony J. Blinken reaffirmed that the US strategy towards China is based on economic competition, especially through technological production and foreign influence. Meanwhile, Chinese companies are at the forefront of battery production and several Chinese mining companies have purchased shares in Lithium Triangle operations.

    The Department of Energy recognizes a Chinese dominance on the lithium-ion battery supply chain. This power is increased through investment in the mining process. The DOE approved National Blueprint for Lithium Batteries highlights working with allies to ensure a steady supply of the critical mineral and create more domestic processing sites. Investing in the Lithium Triangle could help the US compete by counteracting China’s recent acquisitions. 

    Extent of Involvement

    In June of 2022, the US announced its Minerals Security Partnership in hopes of addressing the rising demand for critical minerals used in clean energy; however, the Lithium Triangle countries were not included in this partnership. Although the US recognizes a need for lithium importation, it is not set on partnering with these South American countries. This leaves involvement in the Lithium Triangle to the private sector through companies such as Abermale and Lithium Americas. 

    In examining this involvement, it is important to note that China has already beat out US involvement in Bolivia as the government has recently partnered with several Chinese firms to manage the country’s lithium mining. Meanwhile, Chile’s mining sector is heavily state controlled with only two companies allowed to operate, again limiting options. Argentina is more open to foreign companies with 36 projects as of 2023. The success of American owned company Livent demonstrates an opportunity for more private involvement in the region. Still, additional companies in Argentina may need US financial support because of the overall risk in doing business within the country. 

    The Inflation Reduction Act provides a potential for these partnerships. The plan includes tax cuts for foreign companies within the battery production industry. That being said, this financial support only applies to countries with US free trade agreements which neither Argentina nor Bolivia have. Several Republicans, on the other hand, prioritize supporting domestic mining projects rather than expanding these financial partnerships to the rest of the Lithium Triangle.   

    Ecological Damage

    Another issue to consider with these lithium mines is the local ecological threat. Throughout the Lithium Triangle, mining operations resulted in a decrease in the Flamingo population as well as general harm to the nearby wetland nature reserves. Additionally, the process of water evaporation needed to extract lithium is hurting transandean Indigenous populations by depleting their water supply. With increased US involvement in the region, the mining operations would only grow to match American demands and as a result the potential for further harming the environment and local communities would increase as well.

    The debate around American involvement in the Lithium Triangle boils down to whether the private and domestic sectors can provide enough to match US demands or if the government has to invest more. No matter what, the International Energy Association predicts that the demand for lithium will rise over 90% if countries hope to meet the Paris Agreement in the next couple of decades, so the importance of the lithium industry is not going away.

  • Introduction to Corporate Average Fuel (CAFE) Standards

    Introduction to Corporate Average Fuel (CAFE) Standards

    Overview of CAFE Standards

    Corporate Average Fuel Economy (CAFE) standards are government-set standards regulating how far vehicles should be able to travel on a gallon of fuel. The three different classifications of vehicles, light-, medium-, and heavy-duty, have different CAFE standards. Higher standards mean vehicles should be able to travel further on a single gallon of fuel. CAFE standards for light-duty vehicles are the most relevant to the average consumer, as the category includes passenger cars and light trucks. The standards are set and enforced by the National Highway Traffic Safety Administration (NHTSA) under the Department of Transportation. The Environmental Protection Agency (EPA) calculates average fuel economy levels and sets greenhouse gas emissions standards that accompany CAFE standards.

    CAFE standards aim to increase fuel efficiency in vehicles and reduce total energy consumption. They are thought to improve the nation’s energy security, save consumers money, and reduce greenhouse gas emissions. 

    Recent Policy History

    CAFE standards were first established by Congress in 1975 under the Energy Policy and Conservation Act. They were primarily created in response to the 1973 oil embargo, which posed challenges to the foreign oil-dependent U.S. economy. Congress hoped CAFE standards would double the average fuel economy of new vehicles by 1985 and reduce the country’s dependence on foreign oil imports. Standards then remained largely unchanged until the Energy Independence and Security Act of 2007. The legislation, passed under the Bush administration, raised the fuel economy standards of light-duty vehicles to an average of at least 35 miles per gallon over the next 10 years. 

    In the early 2000s, higher levels of driving and an increased market share of less-efficient SUVs and light trucks contributed to increased oil consumption in the U.S. To combat this, the Obama administration worked with the auto industry to create a two-phase national program to increase fuel efficiency and create greenhouse gas emissions standards for light-duty vehicles. The program is governed by the NHTSA, which oversees CAFE standards, and the EPA, which sets greenhouse gas emissions standards. 

    However, many of the standards set under the Obama administration were rolled back by the Trump administration. In place of CAFE standards, the Trump administration created Safer Affordable Fuel-Efficient (SAFE) standards to give manufacturers more freedom and reduce the quality-adjusted prices of vehicles by an average of $2,200. While SAFE 1 still increased fuel economy standards, it did so at a slower rate than the standards proposed by Obama’s administration. SAFE 1 also proposed that manufacturers comply with the standards by focusing on greenhouse gas emission standards because of the subsequent ability to help reach CAFE standards. SAFE 1 ultimately sought to loosen the annual fuel efficiency increase from 5% to 1.5% through 2026.

    SAFE 1 has since been repealed by the Biden administration for overstepping the agency’s legal authority and for not taking local and national interests into account. Under the new administration, the NHTSA finalized CAFE standards for model years 2024-2026 on March 31, 2022. These recently passed standards require about 49 miles per gallon for all light-duty vehicles by 2026 by increasing fuel efficiency by 8% annually for the years 2024 and 2025, and 10% annually for the year 2026.

    Arguments for CAFE standards

    The NHTSA has found that the recently set CAFE standard of 49 miles per gallon can save consumers nearly $1,400 in total fuel expenses over the lifetime of compliant vehicles and save 234 billion gallons of gas between 2030 and 2050. They’ve also found that the standards reduce greenhouse gas emissions, air pollution, dependency on oil, and will diversify energy usage to increase energy security. The Department of Transportation states that CAFE standards will increase the availability of alternative fuel vehicles and promote the advancement of innovative technologies.

    Scholars argue that CAFE standards have kept U.S. gasoline consumption at a low annual growth rate of 0.2% a year, playing a crucial role in reducing oil imports and dependency. In general, they estimate that the standards have saved consumers two trillion gallons of gasoline since first established. They also argue that these regulations are more effective than a gas tax because they move responsibility and decision-making from the consumer to the manufacturer. This prompts manufacturers to use technology to make their products more fuel-efficient and eventually save consumers money on fuel, despite higher initial costs. On average, a more fuel-efficient vehicle costs $4,800 more than current models, but the savings from reduced fuel consumption are almost four times the additional cost. 

    The Alliance to Save Energy also argues that the standards save consumers money, predicting that by 2025 consumers will have received roughly $8,200 in net savings over the life of the vehicle. Altogether, this results in $1.7 trillion in savings nationwide. In addition, buyers of 2017 vehicles are expected to save money more than 94% of the time, given that ¼ of all new model year 2017 cars would have greater fuel economy and cost less than their 2011 counterparts. On a national scale, the standards are also thought to enhance U.S. competitiveness. Innovative vehicle manufacturers have a first-mover advantage, helping them achieve greater economies of scale and benefit from technological learning. 

    Arguments Against CAFE Standards

    Alternatively, the Heritage Foundation found that to compete with foreign automakers, manufacturers will have to move production oversees, putting thousands in the auto industry out of jobs. This negative economic impact is compounded by the fact that CAFE standards are only cost-effective if fuel prices are high. Without high fuel prices, the cost of research and development and replacing low-efficiency vehicles outweighs the financial benefits of more fuel-efficient vehicles. In addition, CAFE standards may incentivize reducing the weight and steel content of a vehicle, leading to more unsafe cars and designs and increased fatalities. 

    There are a few challenges facing CAFE standard implementation, including the time horizon over which these policies take effect. Since standards apply only to new vehicles, it can take a long time for the full effects to be realized. It currently takes about 15 years for the benefits of CAFE standards to truly take effect and permeate the entire vehicle fleet. It is also difficult to understand the full long-term impact of fuel efficiency on emissions because of the potential for the “rebound” effect, which occurs when greater fuel efficiency encourages more driving, subsequently offsetting any emission reductions resulting from the standards. Another pressing challenge is the lack of coherency in CAFE standards across administrations.