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10 Reasons States Should Just Say No to EPA’s Power Grab

April 16, 2015 by AEA 4 Comments

Since the EPA announced its regulation of carbon dioxide emissions from power plants, what EPA euphemistically calls the “Clean Power Plan,” states across the country have been working tirelessly to assess their options. Many have found they are in a lose-lose situation. No matter what they do, their state will be drastically impacted. Recently, Majority Leader McConnell wrote an op-ed and then a letter to all 50 Governors urging them to think twice about acquiescing to EPA’s overly burdensome mandates.

The states appear to be listening. As of now, twenty states have passed or are considering some legislation pushing back on the EPA’s proposed rule. Several of these efforts involve binding legislation requiring legislative approval and Attorney General review of any State Implementation Plan (SIP) while many others impose limitations and reports studying the detrimental impact of the proposed regulation. Fourteen states have joined the lawsuit challenging the EPA’s authority to promulgate the rule, which is being heard this Thursday in the DC Circuit Court of Appeals. Finally, thirteen governors have written the EPA explaining that the agency’s proposed action exceeds federal authority and puts state compliance in question.

Many states are still weighing their options until the final rule is released later this year. Here are 10 reasons why the states should heed Sen. McConnell’s advice to resist EPA’s power grab:

1. The rule is extremely costly for the American people, particularly those on fixed incomes – The EPA severely underestimates how much this regulation will cost the economy and the American people. Even the non-partisan Government Accountability Office criticized their analysis. Two independent analyses point to significant costs. A study done by NERA Economic Consulting found the rule would cost at least $366 billion by 2031 and residents of 43 states would see annual double-digit electricity bill increases. A second study by Energy Venture Analysis found that combined electric and natural gas bills would rise by $680 annually per family.

2. While the rule comes at great cost, it accomplishes very little in environmental or health benefits – The stated purpose of this regulation is to tackle climate change, yet the EPA did not even attempt to measure the climate benefits of the rule. This is probably because EPA’s own models show the rule does almost nothing to address climate change: it limits global warming by just 0.02 degrees and lowers sea level rise by just 0.01 inch. The administration also claims the rule will improve public health, particularly focusing on kids’ asthma. This conveniently ignores the fact that carbon dioxide emissions have nothing to do with asthma. It also conveniently ignores that while conventional pollutants have steadily decreased over the past several decades, asthma levels have continued to rise, leaving some to question how these two could possibly be related. As a USA Today piece recently suggested, perhaps the President should be more concerned about the impact of his smoking on his daughter’s asthma than climate change.

3. EPA wants a federal takeover of the electricity system – Under the guise of state flexibility, the EPA regulatory scheme would make fundamental and irreversible changes to our electricity system that will centralize power in Washington and drive up electricity rates. This unprecedented rulemaking discards the principles of cooperative federalism, relegating states to the role of “marionettes dancing to the tune of a federal puppeteer,” as liberal law professor Lawrence Tribe has testified.

4. EPA is offloading responsibility for this takeover on the states –Not only is EPA centralizing power, but the agency is also trying to get states to put their stamp of approval on it. States should reject EPA’s demands: the regulatory framework is intentionally designed to get states to take the lead so the EPA’s hands do not get as dirty. Under this approach EPA does not want to be held accountable for the coming disastrous outcomes. This is similar to Obamacare, where the feds wanted states to set up their own health insurance exchanges so they would own some of the fallout for the failure. As Chief Justice John Roberts noted in his opinion on Obamacare, if states believe the feds are usurping their authority they have a responsibility to resist: “In the typical case we look to the States to defend their prerogatives by adopting ‘the simple expedient of not yielding’ to the federal blandishments when they do not want to embrace the federal policies as their own. The States are separate and independent sovereigns. Sometimes they have to act like it.”

5. States that enforce these mandates are ceding authority to the EPA – EPA is attempting to expand its authority under the Clean Air Act using this regulation. If successful at using this framework to take over the electricity system, EPA will be empowered to use it to go after other sectors of the economy (i.e. refiners, manufacturing). States that cede their authority are helping EPA establish a precedent that will be used again down the road to force states to cede even more sovereignty to federal bureaucrats. Once the feds takeover, they rarely ever return authority to the states.

6. The emissions targets are widely viewed to be unfeasible – In addition, the targets EPA has laid out for the states are widely seen as unfeasible, if not impossible, to meet. The power plant efficiency number of 6% is widely considered undoable. Since power plant operators have been so effective at boosting plant efficiency, experts suggest 2% is the most that is still possible. There are also questions about whether it is possible to force natural gas plants to operate at 70% when the national average in 2012 stood at 46%. Lastly, an annual 1.5% demand reduction could be widely off if energy use does not decrease, but rather goes up, as the Energy Information Administration predicts. All considered, there is reasonable fear that meeting these targets is impossible and could potentially threaten the reliability of the grid, or at the very least severely strain it.

7. The EPA does not have the resources to administer a multi-state plan – If the targets are seen as impossible, then a state should not harm their citizens by trying to comply with unreasonable mandates. Instead, states should call the EPA’s bluff and refuse to cede their authority or do the EPA’s bidding. If the EPA wants to do this, then EPA should own the consequences. If multiple states just say no, the limited resources at the EPA would be overwhelmed trying to administer the program.

8. State resistance would severely slow down implementation – Additionally, state rejection of this regulatory framework would severely slow down implementation. EPA’s lack of resources will make it difficult for the agency to meet deadlines, especially if they have to develop and implement multiple state plans. This gives the legal process more time to play out, increasing the likelihood that the Supreme Court could invalidate EPA’s rule before it is fully implemented. Even Professor Tribe has said EPA’s rule amounts to “burning the Constitution.”

9. State rejection of this rule will help build public support for reform – A serious effort by state leaders to fight back against this unconstitutional regulation would significantly help build public support for needed reforms at the Federal level. Survey work done last summer by AEA showed that public support for the proposed rule dropped significantly when individuals were informed about the negligible environmental benefits and the high economic cost of the rule.

10. Federal elected officials and State elected officials should work together to protect prosperity – Some have argued that McConnell should refrain from engaging the states on this issue. That is a ridiculous argument. The American people are well served when state leaders and federal leaders work together to protect their interest, especially in this case. Governors and state lawmakers should be working with Congressional leaders to fight this federal takeover.

Despite complaints from anti-energy interests on the left, Majority Leader McConnell is taking responsible action. While the Democrats controlled the House and the Senate, Congress rejected cap-and-trade legislation because of public outcry of the costs on consumers. Not content to let the will of the people stand, the Obama administration is attempting a legally dubious end run around Congress. Given all of this the Majority Leader has every reason to be involved. He is not alone in this fight. Recently, a coalition of over 30 groups from around the country wrote a letter to McConnell applauding him for his efforts. It’s time for state leaders to heed his advice and reject the EPA’s unprecedented assault on American families.

Filed Under: Emissions Standards, Products and Power Tagged With: 111d, carbon dioxide, clean power plan, EPA, Mitch McConnell

On Tax Day, Big Wind Gets A Windfall

April 15, 2015 by Alex Fitzsimmons 7 Comments

The wind industry often peddles the false claim that conventional energy sources like natural gas, coal, and nuclear receive more subsidies than wind power. Industry lobbyists at the American Wind Energy Association (AWEA) use this myth as a talking point to push for more subsidies, including the federal Production Tax Credit. In reality, the exact opposite is true—wind energy requires massive subsidies to compete with conventional fuels—and new data (once again) prove it.

Recently, the U.S. Energy Information Administration (EIA) released a new report on federal energy subsidies. An analysis of EIA’s data by the Institute for Energy Research found that despite the wind lobby’s claims, wind energy is by far the most heavily subsidized fuel source, receiving more subsidies to produce less energy than conventional fuels. Moreover, even the data AWEA cites to bolster its case shows that wind is a bad deal for taxpayers.

EIA Data: Wind Receives Far More Subsidies than Fossil Fuels

First, consider the following chart derived from EIA’s new report, Direct Federal Financial Interventions and Subsidies in Energy in Fiscal Year 2013. Wind energy received more than $5.9 billion in federal electricity-related subsidies during FY2013, which is almost twice as much as coal, natural gas, and nuclear combined. Solar received the second-most electricity-related subsidies, at nearly $4.4 billion, while all other energy sources received considerably less.

The gap widens further when we consider subsidies per unit of electrical energy produced. Once again, the data show wind receives far more subsidies than conventional energy sources. In FY2013, federal electric subsidies propped up wind to the tune of $35.33 per megawatt hour of electricity, compared to just $0.57 for coal, $0.67 for natural gas and oil, $2.07 for hydropower, and $2.10 for nuclear.

EIA’s data show that wind energy receives far more subsidies to produce far less energy than conventional fuels. Total federal electricity-related subsidies rose 38 percent between FY2010 and FY2013, while electricity-related subsidies for renewables including wind and solar climbed 54 percent. Despite generous and rising subsidies, wind energy supplies just 4.5 percent of U.S. electricity. Meanwhile, natural gas, coal, and nuclear receive far less in subsidies but generate more than 86 percent of the electricity Americans use.

Wind Lobby’s Misleading Math

After EIA released its new report, the American Wind Energy Association (AWEA) wrote a blog post that claims EIA is “missing the big picture on energy subsides” because the EIA report did not consider a longer time frame. AWEA argues that if you consider subsidies since 1950, wind’s subsidies are in line with other sources.

AWEA’s argument, however, is misleading for at least two reasons: even by AWEA’s own numbers, wind still receives more subsides per unit of total energy than conventional fuels; and AWEA uses an overly broad definition of “subsidies” that includes many tax incentives available to all domestic manufacturers, not just energy producers.

First, AWEA claims EIA misses the “big picture” by only looking at subsidies over the last three years. Instead, AWEA examines total energy subsidies between 1950 and 2010, concluding that oil received $369 billion in subsidies, natural gas received $121 billion, coal received $104 billion, nuclear received $73 billion, and wind and solar combined received $74 billion. (These figures include subsidies for all energy, not just electricity production.)

A true assessment of the “big picture,” as AWEA claims to want, requires exploring how much energy was produced for each dollar of subsidy. This could be considered the “value” to taxpayers for their “investment.” By this measure, using the numbers AWEA urges us to consider, wind still costs taxpayers considerably more than conventional fuels. As the following chart shows, wind and solar received 138 times more subsidies per million British Thermal Units (MMBTU) of energy produced than coal, 115 times more subsidies/MMBTU than natural gas, 41 times more than nuclear, and 35 times more than oil. [Note: the study AWEA cites lumps together wind and solar, so we cannot break down the data any further.]

It is misleading to compare total subsidy numbers without considering the cost per unit of energy produced. A look at the “big picture” as AWEA defines it shows that wind is still a worse deal for taxpayers. While the American Energy Alliance opposes all energy subsidies, subsidies for wind have yielded little, making them expensive for taxpayers, while subsidies for conventional fuels have come at a relative bargain.

AWEA Doesn’t Know—Or Care—What a Subsidy Is

Another issue is how AWEA defines a “subsidy.” The study AWEA cites organizes subsidies into several categories: tax policy, regulation, R&D, market activity, government services, and disbursements (grants). The largest category of total subsidies, according to this report, is tax policy, which comprises 47 percent of the total dating back to 1950.

The study defines the tax policy category as “special exemptions, allowances, deductions, credits, etc., related to the federal tax code.” Crucially, the report cites examples: “The oil and gas industries, for example, receive percentage depletion and intangible drilling provisions as an incentive for exploration and development. Federal tax credits and deductions also have been utilized to encourage the use of renewable energy.”

AWEA misses this crucial distinction between the tax incentives offered to oil and gas companies versus wind companies. The percentage depletion allowance and intangible drilling costs are not really “loopholes” but instead reflect economic reality: extracting barrels of oil really does reduce the value of an oil field, which must be taken into account when measuring an operation’s taxable net income.

Oil and gas companies cannot claim the PTC—it is exclusive to renewable energy producers. This targeted subsidy, the PTC, intentionally gives preferential treatment to wind developers at the expense of conventional producers. On the other hand, many of the incentives available to oil and gas producers are not oil and gas specific, but available to domestic manufacturers across numerous industries. That means all manufacturers generally receive similar tax treatment, while the PTC amounts to a special carve out for wind producers.

AWEA draws a false equivalence between the broad-based incentives available to manufacturers and the exclusive subsidies offered to wind developers. When the general public reads statistics about “subsidies for fossil fuels,” they naturally think these were specifically designed as arbitrary handouts for oil and gas companies; the public wouldn’t realize that much of these were features of the tax code that make accounting sense, and/or reflect broader policy goals such as “promoting domestic manufacturing.” Furthermore, since tax policy represents close to half of the subsidies in the study AWEA cites, a more realistic accounting would further increase the per-BTU subsidy cost of wind compared to conventional fuels.

Conclusion

The wind industry continues to perpetuate the myth that wind subsidies are somehow “a drop in the bucket” compared to conventional energy. A look at the “big picture,” as AWEA claims, shows exactly the opposite, with subsidies for wind dramatically outpacing those for conventional fuels. Yet wind lobbyists use this myth to argue for even more subsidies, pleading with lawmakers to level a playing field that is, in reality, already tilted in their favor. Instead of propping up certain energy technologies over others, we should end all subsidies and let energy sources compete on their own merits.

[1] Preferential tax treatment for “intangible drilling costs” is similar to accounting provisions available to other industries for qualifying business investments. Those provisions go by other names, but they have the same effect. See http://instituteforenergyresearch.org/analysis/the-obama-administrations-dishonest-claims-on-big-oil-tax-giveaways/

Filed Under: Can't Make This Up Tagged With: EIA, solar, subsidies, wind, wind ptc

Newsweek: What’s the True Cost of Wind Power?

April 13, 2015 by AEA 2 Comments

Randy Simmons, professor of political economy at Utah State University, recently co-authored an article with Strata Policy Analyst Megan Hansen that sheds light on the true, hidden cost of wind power. Simmons and Hansen find that the enormous amount of federal subsidies and grants given to wind power every year make it hard for Americans to understand just how much they’re paying for such an inefficient, costly resource. An excerpt from their findings follows:

The high costs of federal subsidies and state mandates for wind power have not paid off for the American public. According to the Mercatus Center at George Mason University, wind energy receives a higher percentage of federal subsidies than any other type of energy while generating a very small percentage of the nation’s electricity.

In 2010 the wind energy sector received 42 percent of total federal subsidies while producing only 2 percent of the nation’s total electricity. By comparison, coal receives 10 percent of all subsidies and generates 45 percent and nuclear is about even at about 20 percent.

Wind gobbles up the largest share of subsidies yet produces little power.

But policymakers at the federal and state level, unfortunately, have decided that the American people will have renewable energy, no matter how high the costs. As a result, taxpayers will be stuck paying the cost of subsidies to wealthy wind producers.

Meanwhile, electricity consumers will be forced to purchase the more expensive power that results from state-level mandates for renewable energy production. Although such policies may be well intended, the real results will be limited freedom, reduced prosperity and an increasingly unreliable power supply.

You can read the rest of Simmons and Hansen’s piece here.

Filed Under: Energy Development Tagged With: renewables, subsidies, wind ptc

WSJ Live: Cheaper Oil, Brighter Energy Future

April 13, 2015 by AEA Leave a Comment

AEA President Tom Pyle joined Mary Kissel on WSJ Live to discuss the ways in which energy producers might adapt to the historically low oil prices made possible by America’s shale revolution. And while private innovation has led the charge, Pyle recognizes that even more could be done if the federal government simply got out of the way.

Filed Under: Energy Development, Products and Power Tagged With: oil, rfs, wall street journal, WSJ Live

Taxes In The Wind

April 10, 2015 by AEA 1 Comment

The federal wind Production Tax Credit (PTC) is an incredibly wasteful subsidy that doles out billions of taxpayer dollars to the wind industry and threatens the affordability and reliability of electricity generation from natural gas, coal, and nuclear power. A report by the Institute for Energy Research makes the case for ending Big Wind’s favorite handout. Highlights from the report include:

The PTC is costly. A two-year extension will cost $13.35 billion, which is enough to pay 124 million Americans’ monthly electricity bills.
Americans oppose the PTC. A survey by the American Energy Alliance finds that 65 percent of voters believe two decades worth of tax credits for the wind industry is long enough.
The PTC threatens grid reliability. Wind typically produces the most power when it is needed least: one study finds that “over 84 percent of the installed wind generation infrastructure fails to produce electricity when electric demand is greatest.
Wind energy is expensive. When all factors are considered, wind energy costs $109 per megawatt hour, which is twice as much as this year’s average wholesale electricity price of $54 per MWh.
A vote for the PTC is a vote for Obama’s climate agenda. A key “building block” of EPA’s CO2 rule for existing power plants is increased wind generation. But wind energy depends on the PTC: wind installations dropped 92 percent after the PTC expired at the end of 2012.

So when you’re thinking about what your tax dollars are going towards on April 15th, remember that Big Wind is living large on your dime.

Click here to read IER’s full report.

Filed Under: Cartoons Tagged With: Big Wind, Obama, tax day, taxpayers

America’s Game: Brought to You By Oil & Natural Gas

April 7, 2015 by AEA Leave a Comment

From the first pitch on Opening Day to the final out of the World Series in October, baseball is brought to you by oil and natural gas. The smell of the fresh-cut grass; the uniforms our favorite players don 162 times a year. Even the cold beer you enjoy on a sunny spring afternoon in the bleachers comes courtesy of petroleum products.

So next time you head out to the stadium, most likely wearing a shirt made from natural gas and driving a car fueled by oil, be thankful for the energy sources that power America and her oldest professional sports pastime.

Filed Under: Chart of the Day, Energy Development, Products and Power Tagged With: baseball, natural gas, oil, petroleum

Tom Steyer Doesn’t Understand Gas Prices

April 3, 2015 by Alex Fitzsimmons 4 Comments

The Sacramento Bee headline read, “Tom Steyer wants ‘answers’ for California gas price spike.” California lawmakers had just started to hold hearings investigating the recent rise in gas prices, which were below $2 in some areas a few months ago but have since risen to over $3. The billionaire climate activist said he wanted to make sure Californians get a “fair shake” at the pump. This is rich coming from Steyer, who supports policies that drive up energy costs for Americans.

If Tom Steyer wants answers for California’s high gas prices, he should start by shaking a fist at himself. As Bee opinion writer Dan Walters explains, taxes, mandates, and regulations that Steyer supports are primarily responsible for California’s high gas prices, while the recent spike can be attributed to a temporary supply disruption caused by a refinery fire. From Mr. Walters’ piece:

Gas prices are higher in California than almost anywhere else in the nation, albeit markedly lower than they were a year ago. And there are reasons for that disparity.

California’s fuel taxes are among the highest in the nation, the state Air Resources Board just imposed cap-and-trade fees on fuel, and the state requires unique, smog-fighting formulations.

The state government’s leading expert on the fuel market, the Energy Commission’s Gordon Schremp, told the Senate committee last month that when one refinery was put out of commission by an explosion in February and another by a labor dispute, supplies tightened sharply, forcing refiners to acquire fuel elsewhere that could be re-blended to meet California emissions standards.

The supply squeeze eased after a few weeks, and prices started to decline again.

Most of the remaining price disparity vis-à-vis other states, perhaps 75 cents a gallon, stems from California tax and formulation decrees.

Other than trying to raise his profile for political purposes, it’s difficult to understand why Steyer is complaining.

He is a vociferous advocate of reducing greenhouse gases and logically should want high prices to discourage driving and cut emissions. In fact, one price element – perhaps a dime a gallon – is the cap-and-trade fee imposed in the name of climate change.

Steyer also advocates imposing a tax on oil extraction in California that would push gas prices even higher.

When it comes to gas prices, irrationality reigns.

California’s gas problems are a political problem—one created in no small part by Steyer, who poured millions of dollars into a ballot measure mandating a low carbon fuel standard. That mandate, along with the state’s high taxes and other measures, makes California’s gasoline among the most expensive in the nation. If anyone is preventing Californians from getting a “fair shake” at the pump, it’s Tom Steyer.

Filed Under: Energy Development, Products and Power Tagged With: California, carbon, gas prices, Sacramento Bee, Tom Steyer

Gone With The Wind

April 3, 2015 by AEA 9 Comments

From FY 2010 to 2013, wind subsidies increased by 9 percent from $5.4 billion to $5.9 billion. So while you’re paying your hard-earned taxes, know that Big Wind is living large.

Filed Under: Cartoons Tagged With: subsidies, taxpayer, wind, wind ptc, wind welfare

Coalition: States Should Stand Up to EPA’s Power Grab

April 1, 2015 by AEA 5 Comments

Today, the American Energy Alliance joined 31 other organizations in support of Senator Mitch McConnell’s opposition to the EPA’s reckless, costly Clean Power Plan (CPP). The text of the letter follows:

Dear Sen. McConnell,

We, the undersigned organizations, applaud your work with state governors and legislators to push back against the Environmental Protection Agency’s (EPA) usurpation of state electricity policy through its proposed Clean Power Plan (CPP). Both federal and state officials are right to question the CPP’s legality and the repercussions that would result from submission of a State Implementation Plan.

Opposition to the CPP is a natural response to a regulation that would further centralize power in Washington. The EPA is asking for state complicity in the CPP because the agency likely does not have the legal authority to unilaterally implement the CPP’s proposals. Specifically, the Clean Air Act provides no authority for the EPA to control state laws on renewable generation, electric dispatch policy, or consumer conservation incentives. It is because EPA is desperate to legitimize its most brazen power grab to date that it is pressuring states to submit State Implementation Plans.

We also agree with you that states are completely within their legal rights to “just say no” and let EPA take sole responsibility for implementing the 111(d) rule. The right of states to keep their fingerprints off what they regard as a misguided or unlawful rule is basic to the very concept of cooperative federalism.

It is therefore appropriate for Congress, the branch of government charged with keeping the Executive in check, to help states fully understand the obligations and consequences flowing from obscure federal regulations. After all, Congress wrote the laws the EPA is using to justify the CPP.

All of this matters because the CPP would have an enormous impact on ratepayers and state economic growth. Implementation of the CPP could cause double-digit electricity rate increases in over 40 states and could cost the country nearly $479 billion over 15 years, according to the National Economic Research Associates.

Grid reliability will also suffer. Allowing the EPA to rearrange our electricity system could threaten up to 130 gigawatts of reliable power from coal, natural gas, and nuclear power plants – enough to meet the residential power needs of more than 105 million Americans.

It was due to similar consequences that the 111th Congress rejected cap-and-trade legislation. That legislative failure has not deterred President Obama who made explicit his intent to ignore the will of the American people, famously stating, “cap-and-trade was just one way of skinning the cat.” Given that the current administration has decided to circumvent Congress and achieve the same ends via regulatory fiat, you and other Members of Congress, elected by the People, should do everything possible to prevent unelected EPA bureaucrats from dictating national energy policy.

You can see the original text of the letter and the undersigned organizations here.

Filed Under: Press Releases, Products and Power

Green Dreams on Campus: Rising Tuition, Crippling Debt

March 31, 2015 by Alex Fitzsimmons Leave a Comment

As college tuition and student debt soar, schools across the country are pumping billions of dollars annually into so-called “sustainability” initiatives, which include using expensive renewable energy sources to reduce their greenhouse gas emissions. But what does sustainability really mean? And does it make sense for colleges to divert so much money and resources to nebulous environmental causes at the expense of scholarships, financial aid, or educational programs?

A new report from the nonprofit National Association of Scholars (NAS) explains the numerous ways campus sustainability harms higher education. The report estimates that American colleges and universities spend more than $3.4 billion per year on sustainability-related programs. In exchange, the report finds that “the sustainability movement distorts college curricula” and has “shut down reasoned debate on campuses by foreclosing open inquiry” on environmental issues.

In reality, students and parents are bearing the high cost of sustainability. As the NAS report shows, colleges are pouring vast sums of money into renewable energy programs that drive up costs, inflate tuition, and have little real impact on the environment. Moreover, the sustainability movement has contributed to the rise of a new movement: one that pressures universities to “divest” their financial holdings in natural gas, oil, and coal companies.

The problem is that these universities would divest not only from these fuels, but from the products made from natural gas, oil, and coal, including life-saving pharmaceuticals, high-tech fabrics, steel, and computers, to name a few. Instead of divesting from the energy and products of modern life, we should divest from the unsustainable cost of sustainability.

The Unsustainable Cost of Campus Sustainability

According to the U.S. Environmental Protection Agency, “sustainability creates and maintains the conditions under which humans and nature can exist in productive harmony, that permit fulfilling the social, economic and other requirements of present and future generations.” As EPA explains, “Sustainability is important to making sure that we have and will continue to have, the water, materials, and resources to protect human health and our environment.” That sounds like a worthwhile cause—nobody is against protecting the environment and public health.

In practice, however, sustainability has devolved into an enormous waste of time and resources. One example of this can be found on college campuses. The National Association of Scholars (NAS) released a new report examining the negative effects of campus sustainability programs. The thrust of the report is that colleges are diverting vast resources to sustainability programs even as tuition rates rise, student loan debt soars, and the unemployment rate among college graduates climbs.

First, consider that NAS estimates American colleges and universities spend more than $3.4 billion each year on sustainability programs. That’s enough money to cover tuition for more than 108,866 students to attend private university, or provide in-state tuition for more than 372,031 students. Yet instead of expanding educational access, hundreds of colleges are spending that money promoting expensive renewable energy schemes.

This problem is exacerbated by the fact that the cost of attending college has exploded in recent years. The latest data show tuition and fees at private nonprofit colleges rose 3.7 percent last year, or twice the rate of inflation, to $31,231 per year. Meanwhile, student loan debt is rising to cover higher tuition costs: average debt per student with loans has nearly tripled from $9,450 in 1993 to $29,400 in 2012. Over that time, the percentage of seniors who graduated with loans rose from 47 percent to 71 percent, according to recent data. And finally, 7.5 percent of recent college graduates are unemployed, compared to the national unemployment rate of 5.5 percent.

The NAS report examined Middlebury College as a case study in the high cost of sustainability. In 2006, Middlebury pledged to go “carbon neutral” by 2016. To achieve that goal, NAS estimates the college spends almost $5 million per year, or more than $2,000 per student. The following chart details Middlebury’s annual spending on sustainability programs. More than 42 percent of the total, or about $2.1 million, is spent not on sustainability itself, but on salaries and benefits for the bureaucrats hired to carry out the school’s sustainability efforts.

These annual costs are only part of the story. NAS estimates that Middlebury spent an additional $13.9 million in fixed, one-time costs, including construction of the campus biomass plant. And while Middlebury claims its wood-fed biomass plant saves the college $840,000 per year in fuel oil and $323,709 in operation costs, net costs for Middlebury’s sustainability programs still eclipse $3.7 million annually. It also means it would take the college more than 15 years to pay off its $13.9 million fixed costs, assuming a 5 percent interest rate.

With such a high price tag, students and parents should expect a reasonable return on their investment. Unfortunately, Middlebury’s efforts to combat climate change amount to a drop in the proverbial bucket. Since 2007, the college has reduced carbon dioxide emissions by 27,618 metric tons, or the amount of carbon dioxide 0.007 of an average coal-fired power plant emits in a single year, according to EPA’s greenhouse gas calculator. That means Middlebury spent $543 per metric ton of carbon dioxide reduced, according to NAS. For context, the Obama administration’s official estimate for the value of reducing carbon dioxide is about $39 per metric ton.

As we have explained numerous times, the so-called “social cost of carbon” is a dubious metric that likely inflates the value of CO2 reduction. That means Middlebury paid almost 14 times more than even what the Obama administration claims is the true value of reducing carbon dioxide. In exchange, the college reduced emissions equivalent to less than one hundredth of a single, average coal plant.[1]

This scheme is the opposite of sustainable. It is an enormous waste of money, the costs of which are borne by students and parents. Perhaps more importantly, it is also a waste of time, which is a nonrenewable resource. Every moment dedicated to researching and implementing Middlebury’s “carbon neutral” pledge is time not spent doing what colleges are supposed to do: educate students.

Fossil Fuel Divestment: “Sustainability’s Last Frontier”

Over the last few years, fossil fuel divestment campaigns have cropped up on college campuses across the country. These activists pressure universities to “divest” their financial holdings in natural gas, oil, and coal companies. Though largely unsuccessful, divestment activists have convinced some schools, mostly small liberal arts colleges, to sell off their energy assets.

The NAS report describes divesting from natural gas, oil, and coal stocks as a logical extension of campus sustainability. Indeed, as noted above, Middlebury pays $41,000 per year to Bill McKibben, the godfather of the fossil fuel divestment movement, to serve on staff as a scholar in residence. NAS draws the following parallel between sustainability and divestment:

[Divestment] embodies the ethos that sustainability embraces. The underlying idea is that fossil fuels desecrate the environment, that this desecration is sinful, and that those who would persevere in their reprehensible ways deserve condemnation. The campaign to divest from fossil fuels manifests the fervor of a religious quest for purity and absolution. It declares the public guilty of oil on their hands.

As we explain on our Divestment Truth page, fossil fuel divestment is morally bankrupt for a variety of reasons: taken to its logical conclusion, it would consign billions of people around the world to poverty and darkness; eliminate more than 82 percent of the energy Americans use; deny access to the lifesaving products made from fossil fuels; and make it more difficult for low-income students to attend college.

Sustainability and divestment activists have succeeded in passing the costs of their activism on to parents and students, many of whom may not support their radical causes but nonetheless bankroll these efforts in the form of higher tuition and crippling loans. Natural gas, oil, and coal make modern life possible: they comprise the vast majority of our energy are key feedstock for many every day products, including pharmaceuticals and medical devices. True sustainability is embracing the notion that energy makes life better. If we should divest from anything, let’s start with the unsustainable costs of campus sustainability.

[1] The Environmental Protection Agency calculated carbon dioxide emissions per power plant by dividing the total emissions from coal-fired power plants by the total number of power plants. See http://www.epa.gov/cleanenergy/energy-resources/refs.html#coalplant

Filed Under: Divestment Truth Tagged With: college, divestment, National Association of Scholars, sustainability