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Despite heavy reliance on fossil fuels, Michigan's electorate soundly defeated a Renewable Energy Amendment in 2012 (Proposal 3). The proposal would have mandated that 25% of its electricity come from renewable energy resources by 2025. Prior to the election the State had legislated a 10% goal of adopting more renewable energy into its electricity system through a renewable portfolio standard. Was the defeat a policy failure? This paper employs concepts from the policy failure literature to answer the question. We argue that a traditional policy evaluation such as cost-benefit analysis (CBA) needs to be considered along with broader “political” evaluations. CBA results are complemented with political analysis, which reveal the complexity of evaluating key energy strategies. Keywords: Cost-benefit analysis, Michigan, Policy failure, Renewable energy, Renewable portfolio standard

Facing global climate change and scarce petroleum supplies, the world must switch to sustainable energy systems. While historical transitions between major energy sources have occurred, most of these shifts lasted over a century or longer and were stimulated by resource scarcity, high labor costs, and technological innovations. The energy transition of the 21st century will need to be more rapid. Unfortunately, little is known about how to accelerate energy transitions. This article reviews past transitions and factors behind them, along with their time frames. Three modern case studies are discussed: Brazil, which shifted from an oil-based transportation system to one based on sugarcane-ethanol (success); France, which shifted from oil-fired electric power to nuclear power (success); and the United States, which attempted to shift from foreign oil to a mix of domestic energy resources (failure). Lessons from these attempts to govern energy transitions are discussed. Several policy instruments to accelerate a transition are identified, though even under ideal circumstances a global energy supply transition will be very slow. Given the need to simultaneously implement programs in countries with different political economies, a greater focus on energy efficiency, promotion of Smart Grids, and possibly a new treaty should yield more timely results.

This article considers the integrity of the emerging emissions allowance markets for greenhouse gases (GHG) under the international emissions trading system created by the Kyoto Protocol and the pa...

Wind power is becoming an increasingly attractive method of electric power generation due to concerns with global climate change, increasing uncertainty of future oil supplies, and energy security. While most large-scale wind turbines are part of wind farms, which help states meet state renewable energy standards, several colleges and universities in the United States have purchased wind turbines for financial and educational purposes. This paper gives details of a cost-benefit analysis completed for a small liberal arts college in Illinois, Principia College, which is considering buying a single large-scale turbine. The process set forth here can easily be adapted to any college, university, or school. It is found that the project has a positive net present value for both a 20-year scenario and a 30-year scenario. Assuming the project did not receive any grants, Principia College would need to have an annual real return rate of about 6% on its initial investment to gain the same economic benefits.

This study uses a multi-part, split-sample contingent valuation method (CVM) and fair share (FS) survey to better understand the public's valuation of mitigating global climate change through its willingness to pay for biomass or “cellulosic” ethanol. In addition to a basic CVM question, a related scenario was developed that asked half of the survey respondents to state their fair share cost to lessen a potential food shortage in the next decade, also through the expanded use of cellulosic ethanol. Three alternative biomass feedstocks were assessed: farming residues, forestry residues and paper mill wastes, and municipal solid wastes. Overall a slightly larger proportion of respondents were WTP extra for cellulosic ethanol in the basic CVM scenario than in the FS scenario, though no significant differences were found in the WTP for the different feedstocks. Bid curve lognormal regression results for the two models were similar, supporting the idea that asking a FS rather than a conventional WTP question may be justifiable in some circumstances, such as in cases of a national emergency.

Films are an underutilized media to explore and amplify the many messages of ecological economics. While a few popular films and videos have effectively addressed environmental themes, this commentary argues that they have an even greater role to play in the educational process in order to reach a broader audience and help it to rethink its role in the world's ecosystems. Hayao Miyazaki, the masterful animator from Japan, is singled out to offer ample material in many of his popular and children's films to stimulate such critical thinking on the systemic problems addressed by ecological economics.

With electric generation responsible for 41 percent of U.S anthropogenic carbon dioxide (CO2) emissions from energy use, development of clean energy sources is essential if the United States is to reduce release of greenhouse gases and slow global warming. Many proponents of sustainable energy anticipate that electric generation from renewable sources would thrive in a deregulated market, driven by consumer demand for “green” energy and the end of incentives to build large central power plants under the cost-plus profits guaranteed by state utility commissions. This paper examines the flaws in this expectation. After reviewing the highly cyclical nature of U.S. energy policy making in recent decades, the study links the ineffectiveness of policy with the institutional setting. Under electric utility market restructuring, renewable energy generation (wind, biomass, solar, geothermal, and small-scale hydro) must overcome barriers such as price distortions, lack of storage capability, discriminatory...

Once an arcane topic even among environmental economists, emissions trading systems have substantially increased during this past decade in the USA. Moreover, the implementation of these systems has necessitated increased involvement of professionals in many fields besides economics. This paper reviews the practical experience of the six major types of emissions trading systems, focusing on credit market development, participation and results, including transaction costs. Five more recent applications of emissions trading also are considered, as well as the possibility of inter-pollutant trading. While inter-pollutant trading has been successfully used for chlorofluorocarbons (CFCs), the applicability of this experience is probably very limited. Additionally, it would be highly premature to attempt an evaluation of these newer emissions trading systems, some of which have yet to be even partially implemented. In order to improve these latter and future programs, the paper considers the potential contribution of the New Institutional Economics (NIE) to emissions trading. The NIE is used to develop theoretical insights and a series of predictions about the performance of a range of emissions trading systems.

Interstate trading of SO2 emission allowances under the Clean Air Act, the largest-scale application of market principles to environmental protection, is projected to save over $2.3 billion out of a possible $3 billion in annual compliance costs in the next decade. This study shows that, with one exception, Midwest states have thus far not used trading to sustain high SO2 emission levels.

Rapid growth of biofuel production in the United States and Brazil over the past decade has increased interest in replicating this success in other nations of the Pan American region. However, the continued use of food-based feedstock such as maize is widely seen as unsustainable and is in some cases linked to deforestation and increased greenhouse gas emissions, raising further doubts about long-term sustainability. As a result, many nations are exploring the production and use of cellulosic feedstock, though progress has been extremely slow. In this paper, we will review the North-South axis of biofuel production in the Pan American region and its linkage with the agricultural sectors in five countries. Focus will be given to biofuel policy goals, their results to date, and consideration of sustainability criteria and certification of producers. Policy goals, results, and sustainability will be highlighted for the main biofuel policies that have been enacted at the national level. Geographic focus will be given to the two largest producers-the United States and Brazil; two smaller emerging producers-Argentina and Canada; and one stalled program-Mexico. However, several additional countries in the region are either producing or planning to produce biofuels. We will also review alternative international governance schemes for biofuel sustainability that have been recently developed, and whether the biofuel programs are being managed to achieve improved environmental quality and sustainable development.

The Latin American and Caribbean (LAC) region is a leader in global biofuel production, accounting for 27% of supply. This is driven by a proliferation of mandates and targets calling for increased use of biofuels around the world. Unsustainable biofuel production can alter landscapes and stress social-ecological systems. To mitigate impacts, different types of governance mechanisms have been introduced including national regulations, voluntary certification schemes, sustainability standards, meta-standards, and codes of conduct. Voluntary certification has gained prominence in the region, with over 220 producers and processors in 12 LAC countries obtaining certification. However, given the potential social and environmental impacts evident in the region, voluntary certification may be insufficient and stronger sustainability mechanisms may be justified.

An EPA workshop for state regulators and commission staff revealed a number of interesting aspects of compliance concerns likely to arise. But the biggest concern remains unanswered: will the market-based regime for emissions control produce the best results?

A strategy for a successful climate protection convention must highlight the role of equity in order to bring more nations to the bargaining table. The authors propose two commercial energy protocols for consideration by negotiators in this light. The first links international trading in greenhouse-gas emission ‘rights’ to a country's historical per capita carbon emissions. The charge for these rights should be based on the negotiated reduction in global emissions and the demand for them, via the marketplace. The second requires inefficient countries to make steady improvements in energy efficiency or fuel substitution away from carbon as their economies develop.

Determinants of foreign exploration and development spending by US oil companies are examined with multiple regression analysis. Since major US oil companies earn higher profits abroad, I test the role of profit rate surrogates and cash flow in a petroleum investment model. A high income tax rate is shown to discourage foreign oil investment, a finding that should be recognized by foreign governments. Institutional factors also appear to limit the flow of investment funds out of the United States, despite attractive foreign profit rates.

The prospects for rapid near-term development of a synfuel industry in the USA have decreased, due to depressed world oil prices, synfuel project cost overruns, and the lukewarm support of the Reagan administration. Nonetheless, socioeconomic and environmental impact analysis studies can provide valuable information for determining the regional welfare effects of proposed projects. The author discusses the results of a regional econometric analysis of the synfuel projects planned for Western Kentucky, which focuses on environmental impacts, and reveals the inevitable trade-offs that would accompany synfuel development. Some policy issues are briefly reviewed, especially that of efficient energy pricing.

This paper addresses the problem of anticipating the local economic, demographic and fiscal impacts occurring from the siting of coal liquefaction facilities in the Illinois Basin. This region (primarily western Kentucky) will contain some of the most ambitious liquefaction projects in the U.S., yet no comprehensive method for the estimation of these impacts currently exists. It is suggested that the solution might lie with the development of an integrated econometric impact evaluation model. The potential economic, demographic and fiscal impacts of these projects are also described, preliminary analyses using existing economic impact assessment methods are presented, and certain policy analysis applications are highlighted.

This paper broadens previous discussion on the conditions for subsidizing new energy sources. Several arguments for and against subsidizing new energy sources, such as solar energy and synthetic fuels, are reviewed and critiqued. Emphasis is given to vintage subsidies to conventional energy sources, net energy analysis, and a variety of production externalities. A theorem for determining optimal subsidies to new energy sources is developed, based on a general theorem proposed by Baumol and Bradford [2]. Finally, two equity issues are also considered.

This study addresses the delineation of US coal market regions and their evolution since the 1973 Arab oil embargo. Dichotomizing into compliance (low sulfur) and high sulfur coal deliveries, market regions are generated for 1973, 1977, and 1983. Focus is restricted to steam coal shipments to electric utilities, which currently account for over 80% of the total domestic market. A two-stage method is used. First, cluster analyses are performed on the origin-destination shipments data to generate baseline regions. This is followed by multiple regression analyses on CIF delivered price data for 1983. Sensitivity analysis on the configuration of the regions is also conducted, and some thoughts on the behavior of coal markets conclude the paper. 37 references, 6 figures, 2 tables.