International Economic & Environmental Organizations Propose Indicators to Measure Green Growth

On April 4, 2013, the Green Growth Knowledge Platform (GGKP) released the paper, Moving towards a Common Approach on Green Growth Indicators. The GGKP was established in January 2012 by the Organisation for Economic Co-operation and Development (OECD), the United Nations Environment Programme (UNEP), World Bank, and the Global Green Growth Institute (GGGI). The purpose of the GGKP is to address the “knowledge gaps” encountered by policymakers when seeking information on how to best stimulate economic growth which is environmentally sustainable, or “green,” in nature. The forty-six page GGKP paper is intended to foster the development of a coherent set of “green growth indicators” that could be applied to a broad range of countries to generate evidence for policymakers as they make decisions related to the economy and the environment. The paper reflects the following statement in UN General Assembly Resolution 66/288, adopted in September 2012: “[w]e recognize that . . . indicators . . . are valuable in measuring and accelerating progress” toward “address[ing] the themes of a green economy in the context of sustainable development[.]” The resolution was adopted following the UN Conference on Sustainable Development (Rio + 20) in June 2012.

While the GGKP paper lists more than fifty potential green growth indicators ranging from units of energy consumed per capita to the number of patents issued for environmental inventions, the GGKP ultimately endorses the use of a limited group of “headline indicators“ for ease of communication. The GGKP paper highlights seven such headline indicators recently developed by the OECD, but notes that these indicators remain a work on progress and are subject to revision. While these seven indicators “are at various stages of usability,” they “constitute a concrete starting point in focusing the [green growth and green environment] measurement debate.”

Following is the list of OECD headline indicators highlighted in the GGKP paper:

• “Index of natural resource use”: This indicator would gauge increases or decreases in the country’s natural resource base.

• “Change in land use and coverage“: Changes in land use could be ascertained by the use of satellite aerial photography.

• “Carbon productivity“: Ways to measure this indicator include the calculation of GDP per unit of carbon dioxide emitted.

• “Non-energy material productivity“: This indicator could be measured by looking at GDP per unit of domestic or raw material consumed.

• “‘Green’ MFP [multi-factor productivity] measure“: Standard MFP is used to measure productivity. While standard MFP tends to omit both environmental inputs such as water, and externalities like pollution, a “green” MFP would account for these factors.

• “Population exposure to air pollution“: This indicator would look at the percentage of the population breathing air polluted with particles smaller than 2.5 micrometers in diameter.

• “Indicator for environmental policies“: The GGPK paper notes that a definition has not yet been developed for this indicator. Challenges include quantifying various environmental policies.

The paper also highlights the role that “wealth accounting” could play alongside green growth indicators to monitor the sustainability of economic policies. Wealth accounting seeks to capture not only income and GDP, but also a country’s utilization rate of resources, including man-made physical developments like infrastructure and buildings.

Finally, the GGKP observes growing interest on the part of investors in obtaining environmentally-relevant information on companies, as well as an increase among private sector actors to voluntarily disclose environmental data.

Written by Cherie Tremaine, GIELR Staff

The Problem with Fracking Trade Secrets

Environmentalists seeking greater disclosure of the chemicals used during hydraulic fracturing or “fracking” were dealt a blow last month when a Wyoming district court judge ruled that Wyoming’s Oil and Gas Conservation Commission did not have to disclose the identity of fracking compounds considered as trade secrets under Wyoming’s disclosure rules. The court’s decision serves to highlight the continued debate between environmentalists and oil and gas service companies over the sufficiency of state disclosure rules.

“Fracking“ is a process used by oil and natural gas producers to substantially increase production of oil or natural gas from new or existing wells. Fracking involves pumping massive amounts of fracturing fluids (composed of water and chemical additives) deep underground to create cracks in rock formations to allow the release of trapped oil and natural gas. Although chemical additives generally make up only 0.5 to 2.0 percent of fracturing fluids, hundreds of tons of chemical additives may be used during a single project. One project in Ohio was found to have involved the use of 10.5 million gallons of water, 5,066 tons of sand, and 484.5 tons of chemical additives. A report released by the Democrats of the Congressional Committee on Energy and Commerce revealed that between 2005 and 2009, the fourteen largest oil and natural gas service companies used a combined total of 780 million gallons of fracking compounds, not including water, and at least 750 different chemicals were used. Twenty-nine of those chemicals “are (1) known or possible human carcinogens, (2) regulated under the Safe Drinking Water Act for their risks to human health, or (3) listed as hazardous air pollutants under the Clean Air Act.” Many of these chemicals have not been evaluated for their long-term impacts on human health.

Environmentalists and public health officials have grown concerned that fracking may result in air and ground water contamination and pose a serious health risk to communities that rely on underground aquifers as a source of drinking water. However, concerned parties have been stymied in their efforts to determine the health risk of fracking due to a general lack of information regarding the chemicals used at individual sites. Under current federal law, oil and gas service companies engaged in fracking are not required to disclose the identity of the chemicals in their fracking fluids. Although a handful of states have passed laws requiring some level of disclosure for fracking activities within their borders, the requirements for disclosure vary greatly from state to state. In 2012, a study reported that of the 29 states with fracking activity, only 14 had enacted disclosure laws, and the regulations implementing these laws effectively exempt from public disclosure chemical compounds that oil and gas service companies identify as trade secrets.  Only two states require a justification for withholding the identity of the trade secret compounds. Oil and gas service companies appear to have widely exploited the trade secret exemptions to avoid full disclosure of the chemical additives used in each fracking project. A Business Week article reported that in 2012, oil and gas service companies in Texas claimed trade secret exemptions 19,000 times, which allowed them to withhold information on one out of every seven ingredients used. Scientists and environmentalists argue that without knowing precisely what is going into the ground, they cannot assess the long term impacts of fracking.

Six states do require the disclosure of chemical compounds otherwise protected as trade secrets to medical and emergency personnel under certain circumstances; however, physicians may be required to sign confidentiality agreements before receiving access to the information. Some physicians have complained that these regulations could slow the flow of information in emergency situations. They have also expressed concerns that the confidentiality agreements may act as gag orders that would prevent physicians from sharing information about the treatment of their patients with other medical professionals. Although disclosure of fracking trade secrets to medical professionals may facilitate the treatment of affected individuals, physicians and nurses treating isolated patients do not have the resources to perform the long term studies required to adequately assess the safety of trade secret compounds. Rules requiring disclosure to medical and emergency personnel, therefore, do little to address the serious safety concerns that fracking presents to public health and the environment.

Although environmentalists and health professionals continue to call for greater disclosure of the chemicals used during fracking, oil and gas service companies have vigorously argued that that disclosure of their trade secrets, even to prevent a potential environmental and public health catastrophe, would undermine their ability to effectively compete in the market. Despite the potential risks, states appear reluctant to press oil and gas service companies for broader disclosure. Currently, new disclosure rules are being considered in California, North Carolina, Florida, Illinois, and Alaska.  Of these, Alaska is the only state that has not proposed exemptions for trade secret compounds. Alaska’s proposed regulations still have a ways to go before becoming law, however, and it is likely that oil and gas service companies will push for changes. Unfortunately, it appears as though environmentalists and public health professionals may be in for a long wait before states begin to require full disclosure of fracking compounds.

Written by Michael Anderson, GIELR Staff

GIELR Banquet 2013

Advocating the Kelp Farming Alternative

As Congress begins to eye a new farm bill to replace the current 2008 legislation, some are proposing a new way to farm. Kelp farming is an increasingly attractive prospect from both an environmental and economic standpoint. Kelp is a large category of seaweed that is typically grown in cooler waters and is known for its high iodine content. Most beachgoers are familiar with large clumps of kelp that wash ashore, yet few realize that this beach “nuisance” has myriad benefits and incredible crop potential.

Kelp farming involves seeding long fishing lines and letting them stand vertically in a water column for several months. Each line can support several meters of kelp growth, and a farm could produce as much as 18-22 tons of kelp per acre each season; this enormous production could exist within a relatively small area of water.

Kelp farming is a novel concept in the United States and critics may question the value of growing such a crop. However, kelp provides many benefits. From an environmental standpoint, kelp can be farmed over a small surface area because it is grown vertically. This limits interference with aquatic life and therefore leaves a small footprint on the aquatic ecosystem. More importantly, kelp acts as a nitrogen sink: it soaks up nitrogen in the surrounding water to fuel its growth. This effect can be especially beneficial in waters with a significant amount of terrestrial runoff, as this runoff is often saturated with nitrogen from conventional land-use fertilizers. This nitrogen-sink effect effectively cleans up tidal waters and prevents dangerous algal blooms, which can form when water becomes heavily polluted with nitrogen or phosphorous. Algal blooms can destroy tidal marine life because the nitrogen rich water allows unrestricted algae growth, which sucks up and blocks out the ability of any other aquatic life to acquire oxygen. The algal blooms present an economic problem for local fisheries, which may experience a total fish kill of their desired catch.These blooms could be managed through the controlled use of nitrogen sinks like kelp farms.

Not buying kelp as a crop yet? Kelp is also being studied for its potential as a carbon sink. Plants essentially “capture” excess carbon dioxide through photosynthesis, which lowers the amount of carbon dioxide in the atmosphere. Kelp could provide a means of growing more plant matter, which could help to bind up excess carbon. This binding process reduces the amount of C02 present in the atmosphere.

Perhaps more importantly, an oceanic carbon sink like kelp could ease the production of carbonic acid in the oceans themselves.  While a vocal minority questions whether or not global warming truly presents a problem, our oceans have seen a decrease in their pH since the industrial revolution, indicating increasing acidification. This process is thought to interfere with the shell-forming and bone building processes of many aquatic species, and is implicated in significant failures of shellfish and coral formation. Ocean acidification presents a problem regardless of its cause.

More interested in the economics of kelp than in its environmental benefits? Companies like E.I. Dupont de Nemours & Co have been exploring kelp as a potential biofuel. Projections suggest that kelp biofuel grown in relatively small areas could replace billions of gallons of fossil fuels. Some have suggested that offshore wind farms could act as a seeding base for harvesting a large amount of kelp, thus helping to generate both wind and biofuel alternatives at a single source, further reducing our energy footprint.

Finally kelp is a delicious treat that you should be eating. In fact there is a chance that if you are in the United States reading this right now, you have an iodine deficiency. A change in wheat farming practices combined with an avoidance of table salt are possible causes of a suspected 50% drop in iodine intake among Americans from 1971 to 2001. This author isn’t suggesting a radical increase in iodine or sea vegetable consumption, though a consultation with your doctor and some blood-work may show that kelp is a healthy, natural and delicious way to increase the amount of necessary iodine in your diet.

Written by Mike Grandy, GIELR staff

Keystone XL Pipeline Gets Another Green Light

On Friday, March 1, the State Department released a controversial report regarding the Keystone XL Pipeline project.  In its Draft Supplemental Environmental Impact Statement, the State Department’s outlook was positive for the Pipeline’s creation, noting that there were likely to be “no significant impacts” to natural resources along the Pipeline’s projected path.  The State Department’s release has environmentalist organizations up in arms.

In the lengthy report, the State Department notes that Canada is likely to develop the tar sands regardless of whether the cross-border Pipeline is approved.  The report provides for No Action Alternatives, or those that would result if the Presidential Permit is not issued or the Pipeline was otherwise not constructed.  The State Department lays out several explanations for why Canada’s tar sands development would still go forward, including Canada’s stated commitment to the development and the global nature of the crude oil market, which would support the continued development of the tar sands regardless of its destination.  If the Pipeline is not completed, the State Department contends, the crude oil will still be transported out of Canada to refineries in other countries – which could include the United States.

With the State Department aligning itself with the oil industry, it seems inevitable that the Pipeline construction will soon move forward.  Canada’s oil is landlocked, and although the State Department does not believe the Pipeline would increase domestic consumption of Canadian oil, the Pipeline would make it much easier for Canada to export its oil to other consumers worldwide.  Despite the report’s findings that the Pipeline would not negatively impact climate change, environmental groups including the Sierra Club are resolved to keep fighting; these groups  are concerned about the impact the notoriously costly process of extracting oil from tar sands would have on climate change, period.

Even in the aftermath of President Obama’s State of the Union address, where he went so far as to threaten executive action should Congress fail to address climate change, the State Department’s report appears to signal the Pipeline’s ultimate approval by removing climate change from the equation.   Following the report’s publication in the Federal Register, the public has 45 days to comment, and the President’s decision is not expected until summer at the earliest.

Pipeline supporters have argued that building the Pipeline will result in domestic job growth in America.  This may prove to be another justification for the Pipeline’s approval.  With this major setback to environmental organizations, it remains to be seen what steps these organizations will take to combat the Pipeline.  If the President does approve the Pipeline, the State Department’s report will provide justification for why he is not abandoning the environmental agenda laid out in his State of the Union address.  While environmental organizations are unlikely to agree, the public’s reaction remains to be seen.

Written by Casey O’Brien, GIELR staff

Facilitation of Environmental Mitigation Instead of Regulation

There are two major methods for the federal executive branch to effectuate mitigation of environmental damage. The first and most well-known method achieves reductions in air, water, and ground pollution via rulemaking. The administration dictates to the federal agencies its priorities and goals and the agencies work within statutory frameworks to promulgate rules according to these priorities. Unfortunately for the current administration, the process of rulemaking has become subject to enhanced public and industry scrutiny due to the growth and perceived omnipresence of the administrative state. Rulemaking is frequently stymied in response to public and industry outcry and stalled in the Office of Information and Regulatory Affairs (OIRA) process within the Office of Management and Budget (OMB). One-hundred and fifty rules at the proposal, interim, and final stages are currently backlogged and awaiting approval at OIRA, with unapproved EPA proposals leading the pack. Fortunately for the administration, there are means to unilaterally achieve results through existing federal law.

Agencies are only required to comply with formalistic rulemaking procedures when they promulgate rules that have the force of law – rules which must be followed by regulated entities. When an agency chooses to enter into cooperative agreements with other federal agencies, state or local governments, or private entities under existing statutory authority in lieu of imposing new regulations, that agency is not forcing anyone’s hand and the potential for sustainable environmental change is increased.

Such inter-agency cooperation is now working to provide further reductions in greenhouse gas emissions from the transportation sector within agency-controlled boundaries. Instead of forcing costly changes on reluctant industry actors, the Department of Energy operates the Clean Cities program to facilitate technological improvements in vehicles through cooperative action. The Clean Cities program was initially set up in 1993 in response to the Energy Policy Act of 1992, which requires specified vehicle fleets to utilize alternative fueled vehicles.

The brilliance of the Clean Cities program is that it achieves reductions in greenhouse gas emissions by facilitating partnerships to implement change instead of acting as an environmental regulator. Entities normally opposed to being regulated are placed in the unusual position of going to the agency to request its help in undertaking individualized initiatives, instead of the agency tracking down entities and forcing one-size-fits-all solutions. Clean Cities also has the advantage of being able to facilitate cooperation between different federal agencies, as it has recently accomplished through its National Parks Initiative uniting the Department of Energy with the National Park Service to achieve transportation related greenhouse gas emissions in national parks.

Other agencies within the federal government may be able to work within their enabling statutes to put in place cooperative programs similar to Clean Cities. For example, the Bureau of Land Management (BLM) was formed in 1946 and currently operates under the Federal Land Policy and Management Act (FLPMA) of 1976 within the Department of the Interior. The FLPMA provides the BLM with authority to “enter into contracts and cooperative agreements involving the management, protection, development, and sale of public lands” and “accept contributions or donations of money, services, and property, real, personal, or mixed, for the management, protection, development, acquisition, and conveying of the public lands.” This directive provides authority for the Department of the Interior and BLM to set up a resource center to facilitate cooperative agreements to clean up and restore public lands, which make up nearly 30 percent of the country. A BLM resource center modeled after the Clean Cities program would allow state and local governments, as well as private industry, to obtain information and cooperate for the preservation and improvement of public land without forcing blanket regulations. Many businesses in the United States rely on the continued vitality of public lands to bring in customers, and providing these businesses with the opportunity to care for that public resource may produce public benefits without detracting from the public fisc. Much like Clean Cities, the new program would not reach private lands and only provide progressive environmental changes within federally-managed property, but also like Clean Cities, such a program could significantly mitigate environmental degradation.

Written by Ashley Ailsworth, GIELR Staff

Study Finds Gas Tax Much More Cost-Effective Than Fuel Economy Standards

Policymakers are consistently debating ways to ease the burden of high fuel costs, but new research suggests that higher gasoline taxes may actually save money in the effort to reduce our dependence on foreign oil and address climate change.  In a recent study published in the journal Energy Economics, a group of researchers at MIT compared the total economic effects of two policies for reducing gasoline consumption: 1) fuel economy standards and 2) gasoline taxes.  The study, which was led by Dr. Valerie Karplus, sought to determine how much it would cost under each policy to reduce gasoline consumption twenty percent by 2050.  The researchers concluded that higher gasoline taxes are between six and fourteen times more cost-effective than fuel economy standards.

According to the study, gasoline taxes are more cost-effective because they work in a number of different ways.  First, unlike fuel economy standards, which only apply to new vehicles and are increased incrementally over the next few decades, gasoline taxes apply right away to the 230 million vehicles already on the road.  Second, higher gasoline taxes discourage driving by making it more expensive.  As a result of the higher gas prices, drivers may purchase more efficient vehicles (thus achieving the same effect as mandatory fuel economy standards), increase carpooling and public transportation, or explore biofuels or electric vehicles, which are made more competitive as gas prices increase.  In contrast, higher fuel economy standards alone actually encourage more driving by making it cheaper, which can negate much of the gasoline saved through increased efficiency.  Furthermore, gasoline taxes generate steady revenue that can be used to fund infrastructure and transportation projects, whereas the costs of regulating fuel economy standards generally divert money away from these areas.

The findings of this study can be confirmed by looking at Europe, where gasoline taxes and overall fuel costs are significantly higher, than in the United States.  Because of these higher prices, European drivers tend to choose more fuel-efficient vehicles and drive less than their American counterparts.  As a result, fuel-efficiency rates are much higher than in the United States.

Despite the economic and environmental appeal of increasing the gasoline taxes, United States policymakers generally avoid this policy.  This is especially true now, with gasoline averaging about $3.80 a gallon, including roughly fifty cents in taxes.  Despite the higher costs associated with fuel economy standards, these costs are hidden and only really considered when buying a new vehicle, whereas gasoline taxes are highly visible on a much more frequent basis.  Because of this, the public is strongly opposed to higher gasoline taxes but generally supports fuel economy standards.  As a result, policymakers, especially at the federal level, generally believe fuel economy standards are the best that can be done.

Although the gasoline tax is not given much consideration at the federal level, it has recently become an issue for several states.  For example, instead of increasing its gasoline tax to keep pace with inflation, the Virginia legislature recently reached a deal to eliminate its gasoline tax and replace it with increased sales taxes as well as fees for purchasing hybrid or electric vehicles. Governor Corbett of Pennsylvania is proposing a similar measure. On the other hand, several states, including Maryland, New Hampshire, Massachusetts, and Washington, are now considering increasing their gasoline taxes to help fund infrastructure projects.  These proposals have quickly drawn criticism, and it is unclear whether any of these efforts will be successful.  However, perhaps this study and the attention it has garnered will influence these states and begin to change the politics of the gasoline tax.

Written by Robert J. Van Auken, GIELR staff