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STUDY: Assessing Emerging Policy Threats to the U.S. Power Grid

February 24, 2015 by AEA Leave a Comment

According to a new report from the Institute for Energy Research, the biggest threat to our power grid isn’t a cyber or physical attack – it’s government policies. IER’s new study examines numerous threats to our incredibly dependable power grid, which stem from policies at both the federal and state level. Below is the executive summary of the report:

Executive Summary

Abstract

Reliable, affordable electricity is critical to our well-being and essential to modern life. But today, threats to the reliability of the power grid are numerous: cyber-attacks, weather, and accidents. Fortunately, the most significant threat is also the most avoidable—bad policy. Federal and state policies are already increasing electricity bills around the country, and the worst effects are yet to come. The federal government, and particularly the U.S. Environmental Protection Agency, is promulgating regulations that will reduce the reliability of the power grid with little thought of the consequences. In fact, these policies threaten to take offline 130 gigawatts of reliable electricity generation sources—enough to meet the electricity needs of more than 105 million Americans, or one-third of the population of the entire United States. Reforming policies that threaten grid reliability should be a top priority for policymakers.

Overview

American homes and businesses depend on reliable electricity. We use it to energize everything from our lights and appliances to our computers and the data centers that give us the Internet. Because so much of what we do every day depends on having access to reliable power, threats to the consistent delivery of electricity put modern life itself at risk. Such threats take many forms. Some originate from things beyond our control— such as cyber attacks and extreme weather —and we can seek to defend against and mitigate those threats. Others result from accidental error, such as the transmission line failure that resulted in a major blackout of the Northeastern U.S. in 2003. Smart planning and the use of best practices in the electricity industry can minimize these accidents, but they are an unavoidable part of a society powered by a complex system of electricity delivery.

In contrast, some emerging threats are completely avoidable. These threats come from a different kind of error—bad policy. Currently, a host of federal and state regulations, subsidies, and mandates threaten to undermine the reliability of the U.S. power grid by taking offline over 130 gigawatts of reliable power, which is enough to meet the residential electricity needs of more than 105 million Americans. New stresses on the electricity delivery system are coming primarily from two types of policies:

1) Regulations that directly shut down reliable sources of electricity, such as coal and nuclear power, and

2) Subsidies and mandates that force increased amounts of unreliable sources of electricity on the grid, such as wind and solar power, and undermine the normal operation of reliable power plants.

Together, these two types of policies create a much less reliable grid and increase the chances of a major blackout.

This year, the Environmental Protection Agency (EPA) is slated to finalize a regulation that closes reliable power plants and forces the use of unreliable sources of electricity. With this wide-ranging carbon dioxide regulation under Section 111(d) of the Clean Air Act—called the Existing Source Rule—EPA threatens simultaneously to shut down vast swaths of reliable electricity generation across America and impose a federal mandate for renewable energy. Affected utilities and grid operators are pushing back on the rule and asking for extra time to comply. However, pushing back deadlines does not solve the most important problem with the Existing Source Rule, which is EPA’s disregard for electric reliability.

With this one regulation, EPA will be able to exercise unprecedented control over the electric grid. In turn, grid reliability will suffer because reliability is neither a priority for EPA nor one of EPA’s statutory obligations. Some have referred to the Existing Source Rule as a federal takeover of the electric grid because EPA is proposing to turn electricity markets on their head by mandating a radical shift away from economic dispatch (the tried-and-true method of balancing the grid while minimizing costs by selecting reliable generators on a least-cost basis) and towards environmental dispatch (choosing generation sources based on their carbon dioxide emissions rather than their reliability and cost).

EPA is charging ahead with the Existing Source Rule and other grid-threatening regulations despite vocal opposition from independent grid experts. The North American Electric Reliability Corporation— the group of reliability experts designated by the federal government to oversee the power grid—continues to raise questions about the effect of EPA rules on the grid. It is unclear whether EPA will address these reliability problems before finalizing its rules. Electricity policy in the U.S. deserves to be reevaluated. In fact, if federal and state policymakers intentionally set out to cause havoc for grid operators and hurt grid reliability, they would be hard pressed to do better than the current policy trajectory.

Dozens of policies handicap electric reliability by favoring unreliable sources of power, undercutting reliable sources, or both. From state-level renewable energy mandates, to the wind production tax credit, to multiple EPA rules targeting coal-fired power plants, to—yes—blocking the Keystone XL pipeline, bad policy threatens to wreck America’s power grid. Fortunately, policymakers have every opportunity to address these threats.

For those who want to ensure that Americans have access to reliable electricity long into the future, the time has come to push back against policies that hurt grid reliability. It is time to repeal regulations that shut down reliable sources of power and to remove massive subsidies for unreliable power sources. Today’s electricity policy is a risky nationwide experiment in burning the candle at both ends— something has to give. That means reliability problems and blackouts if emerging policy threats go un-checked. Policymakers should choose now to put the U.S. power grid back on track and to ensure reliable electricity for years to come.

Filed Under: Blog, Studies Tagged With: coal power, electricity, EPA, natural gas, nuclear power, power grid

Divesting from Climate Alarmism

February 24, 2015 by AEA Leave a Comment

The Boston Globe published a letter from Institute for Energy Research CEO Robert Bradley responding to a recent piece by Globe Columnist Jeff Jacoby on the numerous benefits of fossil fuels. The text of Mr. Bradley’s letter is below:

Activists cite “catastrophic climate change” as the impetus for “divesting” from companies that produce natural gas, oil, and coal. But warming has flat-lined since the late 1990s, even as carbon-dioxide emissions have continued to rise; severe-weather events are less common; and the North Pole is still ice-covered, despite Al Gore’s prediction that it would be ice-free by sometime last year. The simple fact is that the famed climate models got it wrong. An analysis by scientist Roy Spencer found that more than 95 percent of climate simulations have over-estimated Earth’s warming trend since 1979. The benefits of using fossil fuels are as obvious as ever. Instead of breaking up with fossil fuels, let’s divest from climate alarmism.

To read Mr. Bradley’s letter, click here.

Filed Under: Divestment Truth Tagged With: climate alarmism, divestment, global warming

Prominent Climate Activist Criticizes Divestment Movement

February 20, 2015 by AEA 1 Comment

The latest critic of the fossil fuel divestment movement isn’t an energy company or a university president, but a prominent climate activist. In a recent interview with Valerie Richardson of the Washington Times, Paul Hamill of the liberal American Security Project called efforts to divest financial holdings in natural gas, oil, and coal companies “a glib PR stunt.” Here’s an excerpt from the piece:

Paul Hamill isn’t what you’d call a climate denier. Far from it. But he’s also not a fan of pressuring academic institutions to sell off their fossil fuel stocks.

Four years after its inception, the divestment movement is under attack, and not just from its natural enemies in the oil, gas and coal business. Opposition is also emerging from liberal analysts, scientists and professors who are wholeheartedly dedicated to combating climate change, but insist that divestment is a waste of time and resources.

“What they [divestment activists] want to do is to reduce CO2 levels in the atmosphere to tackle climate change, and that is spot-on — that’s what we really need to do,” said Mr. Hamill, director of strategy and communications for the center-left American Security Project in Washington, D.C.

“But divesting is not the way to do it. It’s almost like a glib PR stunt. It feels nice to go out and campaign, and it feels nice to try and divest from these companies, but it’s not serious,” he said.

Along with Mr. Hamill, most major universities—from Harvard to Yale to Swarthmore College—want nothing to do with divestment. Swarthmore, for instance, found that the college could “lose $15 million per year over the next 10 years under fossil fuel divestment policies.” That could mean less money for students, including scholarships, research, and need-based financial aid.

Divesting from natural gas, oil, and coal is an immoral cause. It means abandoning not just 82 percent of the energy we use, but also many products we use every day—including lifesaving kidney dialysis machines and sterile plastics used in hospitals. It’s easy to see why even some climate activists oppose the divestment delusion.

Filed Under: Divestment Truth Tagged With: climate activist, climate change, coal, divestment, gas, oil

Denver Post Joins Media Chorus Against Divestment Radicals

February 18, 2015 by AEA Leave a Comment

On the heels of last week’s “Global Divestment Day,” Denver Post columnist Vincent Carroll penned an opinion piece explaining the “folly of fossil fuel divestment.” In it, Mr. Carroll correctly points out that divesting from natural gas, oil, and coal would be akin to divesting from modern life. Here’s an excerpt from his piece:

But fossil fuels actually are nothing like apartheid and tobacco — one a system of racial oppression and the other a product whose health effects are comprehensively bad. By contrast, were you to banish fossil fuels today with a wave of a wand, millions would likely freeze and starve to death as civilization as we know it essentially imploded.

How is it morally disreputable or a waste of profits to supply something that we all rely upon, however much we might wish to transition to non-carbon-based energy sources?

Is it a bad thing that 1.6 billion people were introduced to electricity in the 1990s alone, or a good thing that 1 billion people still lack it today? Of course not.

Recent media coverage of the divestment movement has been largely negative. A recent op-ed in The Wall Street Journal, for instance, slammed divestment as “feel-good folly” that can potentially harm low-income students by reducing university endowments, which are used to provide need-based financial aid.

Meanwhile, Boston Globe columnist Jeff Jacoby exposed the cynical tactics of divestment activists who “demonize the industry” because “it will be easier to turn Big Oil into a pariah than to convince the public to abandon its cars and smartphones.”

To read the rest of Vincent Carroll’s Denver Post column, click here.

Filed Under: Divestment Truth Tagged With: divestment, Energy Poverty, fossil fuels

Study Undermines Scientific Basis for EPA’s Ozone Rule

February 18, 2015 by Alex Fitzsimmons 2 Comments

Researchers have long thought that there was a correlation between living in urban areas and asthma prevalence. This is part of a belief that outdoor air pollution, which is often worse in inner-city areas, contributes to asthma development.

However, a new study questions the link between asthma and city living. It shows that once we adjust for other factors, notably race and poverty, whether a person lives in an urban or a non-urban area is not a good predictor of asthma.

This new research calls into question EPA’s longstanding belief that people, particularly children, who are exposed to more outdoor air pollution, such as ozone, are at a greater risk for developing asthma. Instead, the researchers found that poverty is a greater risk factor for asthma, while living in urban areas (with higher outdoor air pollution) is “not significant.”

The finding that poverty has more to do with asthma than living in urban areas undermines EPA’s case for lowering national standards for ground-level ozone—a regulation that could be the costliest rule ever proposed.

By making people poorer, EPA’s proposed rule could make asthma worse. If this study is correct, then the ozone rule would be inconsistent with EPA’s statutory requirement under the Clean Air Act to protect public health with an “adequate margin of safety.” It also underscores the need for Congress to force EPA to consider the link between economic costs and public health.

In light of this new evidence, EPA should rescind its proposed ozone rule. This rule could exacerbate the public health problem it is trying to mitigate and impose enormous economic burdens on American families. Moreover, ozone levels are already declining without further regulation, obviating the need for more federal mandates.

Study Questions Long-Held Asthma Link

EPA has long linked outdoor air pollution to asthma attacks, the “development of asthma,” and other respiratory conditions. The agency uses the assumed correlation as a pretext for nearly all of its clean air regulations, including its proposed ozone rule.

However, this new study, published in the Journal of Allergy and Clinical Immunology by a team of researchers led by Dr. Corinne Keet at the John’s Hopkins Children’s Center, examined data for 23,065 children across the country. The study concludes: “Although the prevalence of asthma is high in some inner-city areas, this is largely explained by demographic factors and not by living in an urban neighborhood.”

In fact, the authors found that indoor pollution linked to poverty is a greater risk factor for asthma than living in an urban area, where outdoor air pollution is usually worse. As TIME explains:

The new findings still support pollution as a cause for asthma, but it suggests that indoor pollution may be doing more of the harm.

“A lot of what may make a difference is what happens inside the home than outside the home, especially as we spend so much time indoors these days,” says Keet. Allergen exposure from old housing materials, cockroaches and mice, mold pollution, cleaning supplies, and tobacco smoke may be heavy contributors. [Emphasis mine]

The authors note in their study that once they controlled for race, ethnicity, and poverty, the correlation between inner-city living and asthma prevalence disappeared:

Here we show that although some inner-city areas have high rates of asthma, particularly in the Midwest and Northeast, other non-urban poor areas have equal or higher asthma prevalence. Overall, black race, Puerto Rican ethnicity, and poverty rather than residence in an urban area per se are the major risk factors for prevalent asthma. [Emphasis mine]

On the next page, the authors offer further explanation:

Residence in urban areas, a potential risk factor for asthma hypothesized to be mediated by exposure to indoor and outdoor pollution, pest allergens, and violence and other stressful life events, was not found to be a significant risk factor for prevalent asthma or asthma morbidity in this US population–based analysis. [Emphasis mine]

This new study isn’t the first to question the science of asthma and air pollution. Last year, Drs. Julie Goodman and Sonja Sax accused EPA of “cherry-picking” studies to support stricter ozone standards. As Goodman and Sax put it, “EPA assumes that ozone causes more health effects than what the science supports.”

This latest study casts further doubt on the scientific basis for EPA’s ozone rule. In a recent opinion piece for The Hill, Dr. Joseph Perrone, chief science officer at the Center for Accountability in Science, was the first to point out how the Hopkins study undermines EPA’s science on ozone and asthma:

This is science the EPA cannot ignore. If the agency is truly interested in “following the science,” it should spend more time addressing real public health threats than imposing costly rules based on dubious science that may only make us poorer and sicker.

It is important to note that Keet’s study examined asthma prevalence, not asthma attacks or any other health effects. EPA cites reductions in both asthma prevalence and asthma attacks to justify its proposed ozone rule.

EPA’s Ozone Rule Exacerbates Asthma and Poverty

EPA is currently accepting public comments on a proposal to tighten national ozone standards by as much as 20 percent, from 75 parts per billion (ppb) to 60 ppb. EPA Administration Gina McCarthy claims that the proposed rule is necessary because “cutting air pollution to meet ozone standards lowers the risk of asthma.”

In fact, EPA may actually make asthma worse by exacerbating poverty. A recent analysis finds that EPA’s ozone rule could slash economic growth by $270 billion per year, destroy 2.9 million jobs annually, and reduce household spending by $1,570 per year. That would make EPA’s proposal the costliest regulation in U.S. history.

If poverty contributes more to asthma than ozone, EPA’s proposal, which could put millions of Americans out of work and slow economic growth, could actuallyincrease asthma prevalence. That would make EPA’s ozone rule inconsistent with the agency’s statutory obligation under the Clean Air Act to protect public health with an “adequate margin of safety.”

Ozone Declining Without Further Regulation

Even if EPA’s proposed ozone rule didn’t threaten public health, it would still be unnecessary because ozone levels are already declining without a tighter standard. According to EPA’s own data, ozone levels have declined 33 percentsince 1980 alone. The following EPA chart shows national ambient ozone levels between 1980 and 2013:

Further tightening ozone regulations would likely only increase poverty, which could actually make asthma worse. To protect public health with an “adequate margin of safety,” EPA must rescind its proposed rule.

EPA Should Consider Link Between Poverty and Public Health

A major flaw with EPA’s ozone rule is that EPA cannot consider the link between economic costs and public health, even though the science shows that poverty worsens public health. In EPA’s Regulatory Impact Analysis for its proposed ozone rule, the agency claims “the Clean Air Act and judicial decisions make clear that the economic and technical feasibility of attaining ambient standards are not to be considered in setting or revising [National Ambient Air Quality Standards],” including ozone.

This is problematic, as it seems to conflict with EPA’s statutory requirement under the Clean Air Act to protect public health with an “adequate margin of safety.” EPA’s ozone rule could impose enormous compliance costs, resulting in job losses and reduced economic activity. In other words, the rule could make people poorer, which the science shows makes people less healthy.

Congress should force EPA to consider the link between the economic costs of its regulations and public health outcomes. EPA might still conclude that health benefits outweigh costs, but it would at least force the agency to consider the science on poverty and health.

Conclusion

The new study published in the Journal of Allergy and Clinical Immunology found no link between living in an inner city—where outdoor air pollution (including ozone) is generally higher than non-inner-city areas—and asthma prevalence in children. Rather, the study found that poverty is more closely linked to asthma than city living, where outdoor air pollution is generally worse. That means EPA’s proposed ozone rule, which could be the costliest regulation in U.S. history, could actually make asthma worse by making poverty worse. In light of these new findings, EPA should withdraw its proposed ozone rule.

Filed Under: Ozone Rule, Products and Power Tagged With: asthma, EPA, Ozone, poverty

No shirt, no shoes, no fossil fuels

February 13, 2015 by AEA Leave a Comment

Life without natural gas, oil, and coal is not much of a life at all. Click here to learn more about the divestment movement.

Filed Under: Cartoons, Divestment Truth, Products and Power

Boston Globe Exposes Cynical Tactics of Divestment Activists

February 12, 2015 by AEA Leave a Comment

Boston Globe columnist Jeff Jacoby’s most recent column exposes the cynical tactics of the fossil fuel divestment movement. As Mr. Jacoby explains, divestment activists can’t get away with pressuring people to give up the energy and products of modern life (electricity, computers, central air) so they instead attempt to demonize the men and women who work for natural gas, oil, and coal companies.

Below is an excerpt from Mr. Jacoby’s column:

The rise of fossil fuels has led to dramatic gains in human progress — whether that progress is measured in terms of life expectancy, income, education, health, sanitation, transportation, or leisure. Nearly everything that is comfortable and convenient about modern civilization depends on the ready availability of energy, and nearly 90 percent of our energy comes from oil, gas, and coal. Pro-divestment activists know better than to push people to give up electricity, air travel, computers, or central heating — all of which would vanish without the fossil fuel industry. Instead they demonize the industry, reasoning that it will be easier to turn Big Oil into a pariah than to convince the public to abandon its cars and smartphones.

To read the rest of the column, click here.

Filed Under: Divestment Truth Tagged With: divestment day

Congress Should Repeal the RFS

February 12, 2015 by AEA 3 Comments

The RFS is bad policy. It drives up costs for families and mandates a product on the American people whether they want or need it. Two different approaches to dealing with this problem are before Congress. The first and more preferable option is a complete repeal of the RFS, such as HR 703 by Rep. Goodlatte. The second approach taken by bills introduced by Rep. Goodlatte (HR 704) and Senators Toomey and Feinstein (S. 577) primarily focus on corn ethanol and fall short of true reform. Here are seven reasons why this corn-only approach is not a step in the right direction:

It’s an unnecessary government mandate on the American people – While the partial repeal deals with the implied corn ethanol RFS mandate, it fails to address the cellulosic and advanced biofuel mandates, which force expensive products on the American people. The government should not dictate which fuels consumers must use. If people want to use ethanol or gasoline or a mixture of both, they should be able to decide, not Washington bureaucrats.

It focuses the mandate on the most expensive forms of biofuels –Today, corn ethanol is a viable market product because it is a cost-effective way to increase the octane in the fuel supply. With or without the RFS, corn ethanol will continue to be used because it is a less expensive product than other alternatives. By reducing the implied corn mandate and leaving the mandates for other forms of biofuels in place, it props up more expensive forms of biofuels (namely advanced and cellulosic). These biofuels are not viable in the market because they are incredibly expensive—for instance, the Defense Logistics Agency has a history of paying exorbitant sums for “advanced” biofuels, with many contracts averaging $30 to $60 per gallon, compared to around $3 for conventional fuels. If the mandate is focused toward costly advanced biofuels, consumers will feel the brunt of rising gas prices as refiners struggle to meet the mandate.

It gives too much discretion to the EPA – Repealing the implied corn mandate does nothing to hinder EPA’s ability to illegally promote cellulosic or advanced biofuels. The EPA mandated refiners to produce unrealistic amounts of cellulosic. In 2010, when refiners could not reach EPA’s impossible goal to blend millions of gallons of nonexistent cellulosic biofuel, the refiners took EPA to court and won. The D.C. Circuit Court found that EPA’s actions violated the law. This, coupled with the fact that the EPA has not set RFS volume standards for 2014 or 2015, proves that the EPA cannot be trusted to regulate renewable fuel standards. Additionally, when the programs volume levels expire in 2022 the EPA can continue to run the program as it sees fit.

It allows the EPA to inflate “advanced biofuel” numbers with accounting gimmicks – In the face of nonexistent cellulosic production, the EPA simply redefined what constitutes “cellulosic” to include certain types of compressed natural gas, liquefied natural gas, and electricity. This redefinition defies the intent of the law, which is to blend more renewable fuel into gasoline. It is physically impossible to blend CNG, LNG, and electricity into gasoline, which means refiners are simply buying credits to comply with the law on paper without actually increasing the supply of renewable fuel. Failing to repeal the entire RFS would allow the EPA to continue this illegal practice.

The proposal to base the cellulosic mandate on “actual” production does not solve the problem – The Goodlatte partial reform bill aims to set the required cellulosic volumes at the “actual” volumes from the previous year. The problem is, which level of production is the actual level? Depending on which EPA definition of cellulosic is used, the production level in 2014 was either 44,168 gallons or over 33 million gallons. Without significantly reigning in EPA’s authority, this provision will do little to protect consumers.

It encourages inefficient ethanol trading – Another byproduct of the advanced biofuel mandate is the absurd Brazilian sugarcane/corn ethanol trade. In the name of reducing GHGs, the U.S. imports sugarcane from Brazil for use as an “advanced” biofuel and exports corn ethanol to replace it in Brazil. EPA does not account for these GHG emissions. This process only increases costs and overall energy used. Lastly, sugarcane ethanol is not an “advanced” fuel. It has been around since the 1920s.

It moves the RFS toward a California-style Low Carbon Fuel Standard (LCFS) – Removing the corn-ethanol mandate simply makes the RFS more like California’s hugely expensive LCFS. One study determined that California’s LCFS could raise the price of a gallon of gas by over $2.50. Another study found that a potential Northeast/Mid-Atlantic LCFS would cost 147,000 jobs and lower the GDP by $27 billion. A corn-only repeal would pave the way for a national LCFS, which would cost Americans money at the pump and result in lost jobs.

To see a more detailed analysis regarding the problems with partial reform, see this post.

The American Energy Alliance urges Members to refrain from supporting HR 704 or S. 577 to partially repeal the RFS and instead co-sponsor HR 703 and any viable Senate companion to completely repeal the program. Co-sponsoring HR 703 will be calculated into a Member’s final overall score in the American Energy Alliance Scorecard.

Filed Under: Products and Power, Renewable Fuel Standard Tagged With: biofuels, bob goodlatte, ethanol, H.R. 703, Renewable Fuel Standard, rfs

Opinion: Gas, Coal, Oil Fuel Our Everyday Lives

February 12, 2015 by AEA Leave a Comment

American Energy Alliance President Thomas Pyle published an opinion piece in the Miami Herald today. As divestment activists prepare to descend on Miami, Mr. Pyle shows how divesting from fossil fuels amounts to divesting from the energy and products of modern life. The text of the piece is below:

Gas, coal, oil fuel our everyday lives
By Thomas Pyle
2/11/2015

Imagine a group of activists that spends its time opposing companies that produce soap, surgical steel and sterile plastics used in hospitals — because it is the “moral” thing to do. It sounds crazy, but it’s already happening.

The same groups pushing to eliminate these life-saving technologies and many other everyday products will soon descend on Miami. The leaders of this movement are holding a two-day event to convince Floridians to “divest” any stocks or bonds from the companies that help make these essential items.

In reality, these activists want Floridians to “divest” from modern life.

Everyone knows that when they flip on a light switch or fuel up their cars, they are using energy. But you might not realize that many of the products we use every day also come from energy — particularly natural gas, oil and coal.

Besides generating 27 percent of America’s electricity, natural gas is used to make fertilizer, pharmaceuticals, plastics and fabrics, just to name a few. If you’re wearing a shirt made from nylon or polyester, you’re wearing a product that came from natural gas.

The same applies to oil and coal. Besides supplying 95 percent of the nation’s transportation fuel, oil is used to make asphalt, aluminum, shampoo, cosmetics and much more. Every step of your morning, from putting on deodorant to driving to work, involves products derived from oil.

Coal, meanwhile, supplies the largest share of the United States electricity, at almost 40 percent. Coal is also used to make steel, concrete, aspirins, soaps, carbon fiber, and more. Imagine life without roads, bridges, and sidewalks. That is life without coal.

Divesting from natural gas, oil, and coal is akin to divesting from modern civilization. But that’s exactly what the so-called fossil fuel divestment movement wants Floridians to do.

The divestment activists who are coming to Miami don’t just want to take away Floridians’ energy, but also the soap, steel, and plastics, which make modern life possible. Floridians should tell these activists to take a hike.

THOMAS PYLE, PRESIDENT, AMERICAN ENERGY ALLIANCE, WASHINGTON, D.C.

Filed Under: Divestment Truth Tagged With: coal, divestment, global divestment day, natural gas, oil