The journey toward a clean energy economy is complex and filled with technical, economic, and social challenges. Electricity models are key tools for driving this transformation, providing precision and insight into the potential outcomes of energy policies and technological shifts. At the Environmental Defense Fund (EDF), we are working to make these tools more accessible through the U.S. Model Intercomparison Project (MIP), which brings together leading developers of open-source planning models to help steer the nation toward a sustainable energy future. Read More
Market Forces
The Power of Electricity Modeling in the U.S. Clean Energy Transition
How insurance innovation can drive decarbonization
This blog was authored by Talley Burley, Manager, Climate Risk & Insurance; Carolyn Kousky, Associate Vice President for Economics and Policy; and Leslie Labruto, Managing Director, Sustainable Finance.
This is the first in a multi-part series on how insurers can support the energy transition. The series will explore opportunities and challenges and highlight emerging insurance innovations. This will help us build a greater understanding about how the insurance industry, long overlooked as a potential core contributor, can drive emissions reductions. In this first post of the series, we discuss tools that are available to insurers to support the energy transition.
You’ve heard this before. Climate change-driven events — wildfires, hailstorms, tornadoes, hurricanes, and floods — have devastated lives and communities across the country, straining local economies and households as infrastructure, homes, and other personal effects are damaged and destroyed. Mounting costs from extreme weather events have significantly impacted the insurance industry, leading to rising costs and leaving many without sufficient insurance coverage to rebuild. In 2023 natural hazards accounted for $250 billion in economic losses, with insurers and reinsurers paying $95 billion globally. According to a report by SwissRe, insured losses from natural hazards have grown by about 5-7% annually since 1992. Human-driven climate change will continue to lead to more intense and frequent natural hazards. Global greenhouse gas emissions have increased by about 8% since 1990, and today those emissions are the highest they have been in human history. Without significantly greater efforts to reduce global emissions, climate change will only continue to drive costs and strain the insurance sector.
What will it take to reverse these trends? Transformational action and an all-hands-on-deck approach from market sector forces and actors is needed. This includes the insurance industry. While insurance plays a vital role in supporting disaster recovery and resilience, the insurance sector also has a variety of tools and levers it can use to drive the adoption of low-emission, energy-efficient practices.
As the insurance industry faces a period of unprecedented disruption in the face of climate change, insurance markets must evaluate, test and learn from a series of six levers that can make them part of the solution, while also helping their firms, their clients, and their communities remain leaders in innovation and competitiveness. Read More
Navigating a Just Labor Transition: Unveiling the JLT Progress Scale and Strategies for a Fairer Future
This blog was authored by Brigitte Castañeda and Minwoo Hyun, former EDF Doctoral Interns, Raphael Heffron, Professor at the Universite de Pau et des Pays de l’Adour, and by Environmental Defense Fund economist, Luis Fernández Intriago.
As temperatures rise globally, the energy sector stands clearly accountable, putting a critical spotlight on the need for a just energy transition. In particular, the ongoing strikes and labor disputes within the energy sector emphasize the urgent necessity of ensuring an equitable workforce transition. Our new Environmental Defense Fund Economics Discussion Paper: “A Global and Inclusive Just Labor Transition: Challenges and Opportunities in Developing and Developed Countries,” addresses this by evaluating labor policies in both developed and developing countries, introducing the Just Labor Transition Progress Scale to assess their energy transition efforts.
From the experience of the energy transition in developed countries, we find that a successful Just Transition for labor markers in energy sectors requires robust government leadership, financial support, inclusive local consultations, a well-structured taxation framework, evaluation of social security and labor regulations, and a focus on economic diversification to create alternative (and green) job opportunities. Developing countries transitioning from fossil fuels to cleaner energy face further and particular challenges due to having higher informal employment and less social protection. For example, coal-dependent countries are at higher risk due to characteristics that include labor-intensive and low-skilled jobs and geographic concentration, while oil-dependent countries face less disruption with more specialized roles. Overall, careful planning is crucial to maintaining affordability, accessibility, and inclusive employment, particularly in countries with concentrated fossil fuel jobs. Targeted strategies and economic diversification are two policy actions needed to ensure a Just Labor Transition (JLT).
This is why we propose a decision-making policy tool called the Just Labor Transition Progress Scale (JLTPS) to evaluate national progress toward a just labor transition. Our results highlight that most developing countries are at the beginner or moderate stage, while developed countries are at the intermediate stage, with very few at an advanced stage. Read More
Clearing the Air: How New Rules for Oil & Gas Facilities Offer Major Wins for the Environment and Economy
This blog post was authored by Lauren Beatty, High Meadows Postdoctoral Economics Fellow and Aaron Wolfe, Senior Economics and Policy Analyst.
Methane pollution caused by oil and gas production in the U.S. is a major contributor to climate change and releases health-harming pollution into nearby communities. New EPA rules are projected to slash methane emissions from covered sources by 80%.
Between 2024 to 2038, EPA projects a reduction of 58 million tons of methane—equivalent to removing nearly a billion cars from the roads for a year—along with slashing 16 million tons of smog-forming volatile organic compounds (VOC) emissions and 590,000 tons of air toxics. Many of the common-sense measures in the rules will lead to economic and environmental benefits for Americans and have already been adopted by leading states and operators. They also result in capturing otherwise wasted gas. EPA estimates that by 2033, increased recovery of gas will offset $1.4 billion per year of their compliance costs.
In response to arguments from the oil and gas industry that the rules will harm operators, EDF’s Economics team analyzed the economic impacts of the regulations, including their effect on small producers, marginal wells, and consumers. We found that:
- The regulations have low compliance costs, which are further offset by profits from captured gas and are not expected to influence operational decisions by oil and gas producers;
- Marginal wells are provided significant flexibility and are not expected to face significant compliance difficulties; and
- The regulations will cause no perceivable oil and gas price increase for consumers.
Our conclusions are consistent with EPA’s own analysis and bolstered by the experience in leading states where similar methane regulations have been in effect for years without hindering production or harming the industry.
Empowering Chile’s Climate Action: A Citizen’s Guide to Article 6
This blog was authored by Francisco Pinto and Rodrigo Bórquez, economists of the Climate Action Teams (CAT) initiative, and by Environmental Defense Fund economist Luis Fernández Intriago.
Source: Climate Action Teams
Reducing emissions is imperative to address climate change. The mechanisms established in Article 6 of the Paris Agreement can serve as vital tools in our quest to stop the impacts of climate change and safeguard the future of our planet—but navigating its complexities can be tricky.
To tackle this challenge, between June and August 2023, the Climate Action Teams (CAT-Chile) initiative, co-founded by EDF, and the Consensus Building Institute (CBI) conducted a dialogue process in Chile. We aimed to convene key players in a discussion to better understand Article 6’s potential to boost Chile’s climate ambition.
This fruitful dialogue, called “Climate Dialogue: Strengthening Chile’s Ambition through Article 6 of the Paris Agreement“, explored three specific areas:
- The feasibility of implementing Article 6 in Chile,
- The application of safeguards, and
- The short-term actions and tasks to progress in this field.
The dialogue’s outcomes were delivered to Chile’s Ministry of the Environment to consider as they prepared to host their own public-private sector dialogue on ideas around the development of a Chilean Article 6 policy. Read More
Generating public acceptance critical to modernizing the electrical grid
Who, when and how to engage to build support for new infrastructure.
This post is the second in a series dedicated to the future of the electricity sector and new scholarship supported by the Alfred P. Sloan Foundation. Each post is based on a discussion between select researchers and experts working on relevant policy. To learn more and join one of our upcoming conversations, visit the series website.
To make our electric grid cleaner, more reliable and more equitable, we need to invest in new infrastructure—and fast. In the effort to meet our country’s clean energy goals, policymakers will plan for new transmission lines, wind and solar farms and storage solutions, all of which will have an impact on the people living nearby. Communicating about these investments with the affected stakeholders must be done in a thoughtful and careful manner, or—as we’ve seen with other types of infrastructure projects—they can face delays or even fail altogether.
In our latest Alfred P. Sloan Foundation-funded webinar—which you can find here—we explored the barriers to public support of the infrastructure required to achieve a net zero electric grid as well as ways to engage with communities and other stakeholders more successfully.
The webinar, moderated by Dr. Elizabeth J. Wilson of Dartmouth College, featured panelists including Dr. Tanya Heikkila, Kate Konschnik, Dr. David Konisky and Amanda Ormond. Each of the academic panelists presented aspects of their research, while Ms. Ormond provided insights from her experience with infrastructure conflicts in the West.
Understanding constituencies—and conflicts
Dr. Heikkila’s research on conflicts around energy infrastructure found a variation in conflict intensity based on location, population and project type. Her analysis found that nonprofits and the general public tended to vocally oppose new infrastructure (regardless of the type), while energy companies were more supportive of infrastructure investments. Furthermore, “in high conflict cases,” Dr. Heikkila said, “people from different positions often talk past each other. So they’re not framing the issue in the same way.”
Ms. Konschnik’s research focuses on Regional Transmission Organizations (RTOs), which she describes as “the most important players in the energy transition that you’ve never heard of.” These non-profit organizations control transmission in a region, but also create the rules that affect market values, and in turn, investment decisions in key energy infrastructure.
However, RTOs (and very similar organizations known as Independent System Operators) function largely below the radar of the general public, as their consensus and decision-making processes are held behind closed doors, with energy market participants being the primary stakeholders engaging in these discussions. Though the public has largely been absent from these conversations, stakeholder agreement is not a foregone conclusion. In fact, as the energy market has become more diverse, with greater participation of renewable and distributed resources, conflicts around the rules between these market players have only increased.
No matter the stakeholders involved, Amanda Ormond says one of the biggest challenges facing policymakers today is extreme polarization. While opposition may have always existed, the outsized influence of politics, social media, hidden hands and even paid actors can lead to the abandonment of science-based decision making.
Location and project-type matter
The type of project and its location can determine the intensity of opposition. While more than 60% of the projects Dr. Heikkila studied experienced low-intensity conflict, pipelines and wind farms were found to generate greater opposition than solar and transmission lines. More intense opposition was found in infrastructure projects located in counties with a majority of residents associated with the Democratic party (except with regards to transmission lines), while lower-intensity conflict was more common in counties with Hispanic and Black residents, raising important questions about environmental justice.
Regional differences also exist. Pipelines tend to generate more intense conflict in the West and the Midwest, while transmission lines tend to generate greater conflict in the Northeast, Midwest and the West. The South has lower levels of conflict in general.
Dr. Konisky examined the phenomenon of NIMBYism, testing whether the “not in my backyard” sentiment is as common in opposition to infrastructure projects as it appears in media. After distributing 16,200 surveys across 6 states and 14 projects, his team found little evidence of NIMBYism, as opposition and support of projects did not tend to vary with respondent’s proximity to them. What he did find was that people opposed projects if they were concerned about the impacts on environmental quality and climate change or had greater distrust in energy companies.
Process is critical
All of the panelists discussed the need to improve public engagement in decision-making. For Ms. Ormond, that includes early engagement, assessment and testing to give policymakers a baseline understanding of sentiment prior to hearings. This is necessary, in part, because of the emergence of paid actors and organizations that engage in astroturfing to either generate a crisis or the impression that a project is universally supported. Without that baseline knowledge, a policymaker could be swayed by disingenuous parties, she says.
Dr. Konisky noted the importance of listening to diverse voices in the decision-making process. “Government is not always great at that,” he said, adding that building trust in institutions takes time—a luxury we do not have. “This is a real puzzle,” he said. “We have to figure out a way forward to do both things well—to go fast but to also be inclusive.”
In some cases, specifically among RTOS, there is a fear of engaging the general public, who they often view as lacking technical expertise. That said, Ms. Konschnik notes the need for greater transparency—including posting meeting minutes, in order to increase public understanding of the process and decision-making related to energy investments.
Part of the challenge, Dr. Heikkila says, is that the act of engaging the public itself can generate conflict. We need to determine how to create dialogue in a way helps build trust and allows us to talk to each other in a product manner. Engaging early is important, but how you engage is essential, she says.
Explaining the “Why” behind projects
Demonstrating the relevance of new energy infrastructure is important in generating support. Drawing connections between major climate-related events like wildfires could compel people to engage in energy planning. Increasing the knowledge of stakeholders takes time, but Ms. Ormond has seen it build trust and generate greater support for a clean transition.
Beyond that, both Ms. Ormond and Dr. Heikkila noted the need to articulate a broader energy policy. Without a consistent, national energy policy, individual projects can suffer from a lack of purpose in the eyes of the public. However, Ms. Ormond notes that state goals of becoming 100% clean can also demonstrate to the public how each project supports these objectives, giving them a better understanding of how infrastructure fits into a broader goal. Demonstrating how individual projects can help us meet climate goals while ensuring a more reliable, efficient and equitable grid should be at the forefront.
Achieving public acceptance of energy infrastructure is possible
As we move towards a cleaner grid, we will be making significant investments in energy infrastructure. This will naturally cause conflicts and concern as individuals will be affected by these investments, one way or the other. However, this webinar demonstrated that not all is lost. As long as we ensure that process is inclusive, transparent and clearly demonstrates the social and environmental benefits associated with the investment, we can achieve a future grid that is equitable, clean and responsive to the concerns of stakeholders.