Law Commons^™

Virtual Energy, Joel B. Eisen, Felix Mormann, Heather E. Payne

Faculty Scholarship

From employment to education, many areas of our daily lives have gone virtual, including the virtual workplace and virtual classes. By comparison, the way we generate, deliver, and consume electricity is an anachronism. And the electric industry’s outdated business model and regulatory framework are failing. For the last century-and-a-half, we have relied on ever larger power plants to generate the electricity we consume, often hundreds of miles away from the point of production. But the outsized carbon footprint of these power plants and the need to transmit their output over long distances threaten the electric grid’s reliability, affordability, and long-term …

Grid Governance In The Energy-Trilemma Era: Remedying The Democracy Deficit, Daniel E. Walters, Andrew N. Kleit

Faculty Scholarship

Transforming the electric power grid is central to any viable scenario for addressing global climate change, but the process and politics of this transformation are complex. The desire to transform the grid creates an “energy trilemma” involving often conflicting desires for reliability, cost, and decarbonization; and, at least in the short run, it is difficult to avoid making tradeoffs between these different goals. It is somewhat shocking, then, that many crucial decisions about electric power service in the United States are made not by consumers or their utilities, nor by state public utilities commissions or federal regulators. Instead, for much …

Climate Choice Architecture, Felix Mormann

Faculty Scholarship

Personal choices drive global warming nearly as much as institutional decisions. Yet, policymakers overwhelmingly target large-scale industrial facilities for reductions in carbon emissions, with individual and household emissions a mere afterthought. Recent advances in behavioral economics, cognitive psychology, and related fields have produced a veritable behavior change revolution. Subtle changes to the choice environment, or nudges, have improved stake-holder decision-making in a wide range of contexts, from healthier food choices to better retirement planning. But the vast potential of choice architecture remains largely untapped for purposes of climate policy and action. This Article explores that untapped potential and makes the …

The Environmental, Social, Governance (Esg) Debate Emerges From The Soil Of Climate Denial, Lawrence J. Trautman, Neal Newman

Faculty Scholarship

It has been almost six decades since Rachel Carson’s ominous warning of pending environmental disaster. During 2019 the United Nations requested urgent action from world leaders, given that “just over a decade is all that remains to stop irreversible damage from climate change.” With every passing year, damage resulting from destructive climate change causes increased pain, suffering, death and massive property loss. During 2020 and 2021 alone, severe weather events have included: destructive fires in California; record breaking freeze, power outage, and threat to the electrical grid in Texas; continuation of disruptive drought in U.S. Western states; and record-breaking high …

Introduction To Special Section On Climate Change Litigation, Vanessa Casado-Pérez, Emanuela Orlando

Faculty Scholarship

Acknowledging the exponential growth and global dimension of climate litigation, this introductory piece to this Special Section starts by situating this phenomenon in the context of the scholarly debate on polycentric and multi-level climate governance. It highlights both the strategic use of climate litigation as a tool to establish responsibilities and push for a more ambitious mitigation and adaptation agenda, but also as an opportunity to better understand the role of courts in public policy governance. The second part of the article then proceeds to discuss the main findings arising from the various contributions grouped in this section, and concludes …

The Case For Corporate Climate Ratings: Nudging Financial Markets, Felix Mormann, Milica Mormann

Faculty Scholarship

Capital markets are cast as both villain and hero in the climate playbill. The trillions of dollars required to combat climate change leave ample room for heroics from the financial sector. For the time being, however, capital continues to flow readily toward fossil fuels and other carbon-intensive industries. Drawing on the results of an empirical study, this Article posits that ratings of corporate climate risk and governance can help overcome pervasive information asymmetries and nudge investors toward more climate-conscious investment choices with welfare-enhancing effects.

In the absence of a meaningful price on carbon, three private ordering initiatives are trying to …

Beyond Algorithms: Toward A Normative Theory Of Automated Regulation, Felix Mormann

Faculty Scholarship

The proliferation of artificial intelligence in our daily lives has spawned a burgeoning literature on the dawn of dehumanized, algorithmic governance. Remarkably, the scholarly discourse overwhelmingly fails to acknowledge that automated, non-human governance has long been a reality. For more than a century, policymakers have relied on regulations that automatically adjust to changing circumstances, without the need for human intervention. This article surveys the track record of self-adjusting governance mechanisms to propose a normative theory of automated regulation.

Effective policymaking frequently requires anticipation of future developments, from technology innovation to geopolitical change. Self-adjusting regulation offers an insurance policy against the …

Animal Agriculture Liability For Climatic Nuisance: A Path Forward For Climate Change Litigation?, Daniel E. Walters

Faculty Scholarship

Despite possessing statutory authority to regulate at least some contributing causes of climate change, environmental regulators in the United States have recently found themselves tied up in political gridlock. In response, advocates are turning from the regulatory track to a common law liability track, bringing public nuisance suits against fossil fuel producers and electric utilities. However, most of these public nuisance suits have met a common fate: they have been held to be displaced by the comprehensive regulatory framework for controlling greenhouse gas emissions contained in the Clean Air Act. As long as there is even the possibility of regulatory …

Clean Energy Equity, Felix Mormann

Faculty Scholarship

Solar, wind, and other clean, renewable sources of energy promise to mitigate climate change, enhance energy security, and foster economic growth. But many of the policies in place to promote clean energy today are marred by an uneven distribution of economic opportunities and associated financial burdens. Tax incentives for renewables cost American taxpayers billions of dollars every year, yet the tax code effectively precludes all but the largest banks and most profitable corporations from reaping the benefits of these tax breaks. Other policies, such as renewable portfolio standards that set minimum quota to create demand for renewable electricity require such …

Managing Hurricane (And Other Natural Disaster) Risk, Robert Jerry Ii

Texas A&M Law Review

With the data showing that hurricanes are the most likely and serious of all of these disasters, we return to Hurricane Harvey. No one living in Texas—especially in the cities of Houston, Port Arthur, Bridge City, Rockport, Wharton, Conroe, Port Aransas, and Victoria, or more generally in the counties of Harris, Aransas, Nueces, Jefferson, Orange, Victoria, Calhoun, Matagorda, Brazoria, Galveston, Fort Bend, Montgomery, and Wharton—needs to be told that the U.S. needs a better approach to managing hurricane and other natural disaster risk, both in terms of pre-disaster planning and post-disaster recovery. Texans are not alone, as survivors of Hurricanes …

Betting On Climate Policy: Using Prediction Markets To Address Global Warming, Gary M. Lucas Jr, Felix Mormann

Faculty Scholarship

Global warming, sea level rise, and extreme weather events have made climate change a top priority for policymakers across the globe. But which policies are best suited to tackle the enormous challenges presented by our changing climate? This Article proposes that policymakers turn to prediction markets to answer that crucial question. Prediction markets have a strong track record of outperforming other forecasting mechanisms across a wide range of contexts — from predicting election outcomes and economic trends to guessing Oscar winners. In the context of climate change, market participants could, for example, bet on important climate outcomes conditioned on the …

Market Segmentation Vs. Subsidization: Clean Energy Credits And The Commerce Clause's Economic Wisdom, Felix Mormann

Faculty Scholarship

The dormant Commerce Clause has long been a thorn in the side of state policymakers. The latest battleground for the clash between federal courts and state legislatures is energy policy. In the absence of a decisive federal policy response to climate change, nearly thirty states have created a new type of securities—clean energy credits—to promote lowcarbon renewable and nuclear power. As more and more of these programs come under attack for alleged violations of the dormant Commerce Clause, this Article explores the constitutional constraints on clean energy credit policies. Careful analysis of recent and ongoing litigation reveals the need for …

Can Clean Energy Policy Promote Environmental, Economic, And Social Sustainability?, Felix Mormann

Faculty Scholarship

Two and a half decades of clean energy policymaking focused primarily on environmental and economic sustainability have yielded considerable environmental and economic benefits. Along the way, however, other policy considerations, such as the social sustainability of the transition to a cleaner, renewably fueled energy economy, have gone largely overlooked. As clean energy technologies continue to gain ever-greater traction in the United States and global energy economies, the social impacts of their enabling policies become more and more salient. Already, ratepayers, taxpayers, and other stakeholders who fear being left behind by the clean energy transition question the “fairness” of today’s renewable …

Carrots And Sticks In Private Climate Governance, Jonathan Gilligan

Texas A&M Law Review

When public governance fails to address important environmental threats— such as climate change—private governance by firms, not-for-profits, individuals, and households can produce significant reductions in greenhouse gas emissions. Private governance can take the form of either a carrot or a stick, using incentives or punishments. Shareholder activism as a form of private governance of corporations has largely been confrontational, leading most climate-related actions to fail. This Article examines the potential for private governance to take a more collaborative approach and to frame shareholder engagement with management in terms of opportunity. It also examines private governance successes at reducing household emissions …

Regulatory Carrots And Sticks In Climate Policy: Some Political Economic Observations, Jason S. Johnston

Texas A&M Law Review

This Article sets out an informal political economic theory which explains the relative permanence of regulatory carrots—legislative subsidies and mandates for product use—versus the transience of regulatory sticks—traditional costly regulatory requirements. After setting out the elements of this theory, I illustrate it with the dramatic rise in the Obama Administration and abrupt cessation in the Trump Administration of attempts to use conventional U.S. environmental regulatory sticks to end the U.S. coal industry. The Article turns then to describe a concrete example of a regulatory carrot—the U.S. corn ethanol mandate—that has survived despite overwhelming evidence that its environmental benefits, if any, …

Voter Psychology And The Carbon Tax, Gary M. Lucas Jr

Faculty Scholarship

Economists across the political spectrum argue that a carbon tax is the most effective and economically efficient policy for addressing climate change. Voters, however, strongly oppose the carbon tax and instead favor “green” subsidies and command-and-control regulations. If carefully designed, these policies might complement a carbon tax, but by themselves, they will make global warming mitigation incredibly expensive and perhaps even infeasible. Moreover, if poorly designed, subsidies and regulations can be counterproductive.

This Article argues that the public dislikes the carbon tax because the tax possesses attributes that make it psychologically unappealing relative to other climate policy instruments. The Article …

Behavioral Public Choice And The Carbon Tax, Gary M. Lucas Jr

Faculty Scholarship

In response to the historic Paris Agreement on climate change and to the Environmental Protection Agency’s recently finalized Clean Power Plan, economists and other climate policy experts have renewed the call for the United States to adopt a carbon tax. Opposition among the public presents a major obstacle. While a majority of the public supports government action on climate change, most people favor the use of “green” subsidies and command-and-control regulations—a fact that frustrates economists of all political stripes who contend that a carbon tax would be much cheaper and more effective. This Article argues that a cognitive bias known …

A Tale Of Three Markets: Comparing The Renewable Energy Experiences Of California, Texas, And Germany, Felix Mormann, Dan Reicher, Victor Hanna

Faculty Scholarship

The Obama administration has repeatedly identified the large-scale build-out of clean, renewable energy infrastructure as a key priority of the United States. The President’s calls for a cleaner energy economy are often accompanied by references to other industrialized countries such as Germany, hailed by many as a leader in renewable energy deployment. Indeed, the share of renewables in Germany’s electricity generation mix is twice that of the United States, and the ambitious “Energiewende” commits the country to meeting 80% of its electricity needs with renewables by 2050. While some praise the German renewables experience as successful proof of concept, others …

Clean Energy Federalism, Felix Mormann

Faculty Scholarship

Legal scholarship tends to approach the law and policy of clean energy from an environmental law perspective. As hydraulic fracturing, renewable energy integration, nuclear reactor (re)licensing, transport biofuel mandates, and other energy issues have pushed to the forefront of the environmental law debate, clean energy law has begun to emancipate itself. The emerging literature on clean energy federalism is a symptom of this emancipation. This Article adds to that literature by offering two case studies, a novel model for policy integration, and theoretical insights to elucidate the relationship between environmental federalism and clean energy federalism.

Renewable portfolio standards and feed-in …

Cooperative Transboundary Mechanism, Alena Drieschova, Gabriel Eckstein

Faculty Scholarship

Management of transboundary waters in increasingly becoming more challenging, and climate change is likely to exacerbate these pressures. Not least because climate change is a global issue, adaptation will require an international response. This book aims to identify issues, both theoretical and practical, that States face in establishing cooperative transboundary mechanisms to effectively adapt water management to climate change. Furthermore, it will address complex legal hurdles that existing transboundary water institutions face when attempting to adapt existing mechanisms to function in a changing climate. It will also provide an overview of best practices in transboundary adaptive water governance thus far, …

Beyond Tax Credits: Smarter Tax Policy For A Cleaner, More Democratic Energy Future, Felix Mormann

Faculty Scholarship

Solar, wind, and other renewable energy technologies have the potential to mitigate climate change, secure America’s energy independence, and create millions of green jobs. In the absence of a price on carbon emissions, however, these long-term benefits will not be realized without near-term policy support for renewables. This Article assesses the efficiency of federal tax incentives for renewables and proposes policy reform to more cost-effectively promote renewable energy through capital markets and crowdfunding.

Federal support for renewable energy projects today comes primarily in the form of tax incentives such as accelerated depreciation and, critically, tax credits. Empirical evidence reveals that …

Smarter Finance For Cleaner Energy: Open Up Master Limited Partnerships (Mlps) And Real Estate Investment Trusts (Reits) To Renewable Energy Investment, Felix Mormann, Dan Reicher

Faculty Scholarship

This policy proposal makes the case for opening Master Limited Partnerships (MLPs) and Real Estate Investment Trusts (REITs) — both well-established investment structures — to renewable energy investment. MLPs and, more recently, REITs have a proven track record for promoting oil, gas, and other traditional energy sources. When extended to renewable energy projects these tools will help promote growth, move renewables closer to subsidy independence, and vastly broaden the base of investors in America’s energy economy.

Enhancing The Investor Appeal Of Renewable Energy, Felix Mormann

Faculty Scholarship

This article introduces an investor-oriented framework for the evaluation of renewable energy policy, applies these newly developed criteria to a qualitative comparison of the primary policy instruments, and offers recommendations to enhance the investor appeal of renewable energy in the United States.

The multi-trillion dollar task of scaling renewable energy technologies to mitigate climate change, ensure energy security, and create green jobs is one of the most daunting challenges of the twenty-first century. It is, in fact, too great a challenge for either the public or private sector to shoulder alone. Rather, public policy must catalyze private investment in renewable …

Mobilizing Public Markets To Finance Renewable Energy Projects: Insights From Expert Stakeholders, Paul Schwabe, Michael Mendelsohn, Felix Mormann, Douglas J. Arent

Faculty Scholarship

Financing renewable energy projects in the United States can be a complex, time consuming, and expensive process. Currently, most equity investment in new renewable power production facilities is supported by tax credits and accelerated depreciation benefits, and is constrained by the pool of potential investors that can fully use these tax benefits and are willing to engage in complex financial structures. For debt financing, non-government lending to renewables has largely been provided by foreign banks that may be under future lending constraints due to economic and regulatory conditions.

To discuss these and other renewable energy financing challenges and to identify …

Requirements For A Renewables Revolution, Felix Mormann

Faculty Scholarship

This Article identifies and analyzes the obstacles presently barring the rise of renewables, evaluates the role of the current policy favorite emission pricing, and offers design recommendations for a comprehensive U.S. renewables policy.

Successful climate change mitigation requires a timely shift to renewable sources of energy, such as sunlight, wind or tides, to decarbonize today’s high-carbon electricity sector. But market pull alone is not strong enough. This Article discusses the most widely cited economic barriers and identifies and evaluates additional obstacles related to the electricity sector’s regulatory framework.

Emission pricing is largely considered the most efficient policy to drive the …

Water Scarcity, Conflict, And Security In A Climate Change World: Challenges And Opportunities For International Law And Policy, Gabriel Eckstein

Faculty Scholarship

Although climate change is expected to have major consequences that affect the global environment in its broadest sense, one of the earliest and most direct impacts will be on Earth’s fresh water systems. While some regions will experience increased precipitation, others will suffer serious scarcity. Among others, consequences are likely to include severe flooding, extreme droughts, and meandering border-rivers. This, in turn, will affect human migration patterns, population growths, agricultural activities, economic development, and the environment. This article explores the impact that climate change will have on regional and global freshwater resources and the resulting legal and policy implications that …