Search anytime by typing below

Thanks for joining the AEA efforts to help combat rising energy prices. We don’t want to bug you that often, so let us know what energy issues interest you, and we’ll keep your inbox happy.

*Please fill in all items

Valero Dumps Cellulosic Ethanol Project

August 21, 2013 by Leave a Comment

A company that received lavish subsidies to build a cellulosic ethanol plant in Michigan recently lost a major private-sector investor.

Mascoma Corp.[i] must now look elsewhere for funding its ethanol facility in Kinross, Michigan, after news that Valero Energy Corp. is withdrawing its $50 million dollar investment. Mascoma, a New Hampshire-based renewable fuels company, received nearly $120 million in federal and state grants for its $233 million project[ii], yet construction of the plant remains far behind schedule.

Plans for the plant began in 2008 when Mascoma joined with J.M. Longyear, a Michigan-based natural resources company, to form Frontier Renewable Resources LLC. Frontier was expected to build a facility that could initially produce 20 million gallons of ethanol per year from hardwood pulpwood[iii] and eventually produce 40 million gallons of cellulosic ethanol annually.[iv] This is a lofty goal considering the entire industry produced just 20,069 gallons of cellulosic ethanol in 2012, even though the EPA mandated 8.65 million gallons under the Renewable Fuel Standard (RFS).[v]

Prior to Valero’s investment, Mascoma received a $20 million grant from the State of Michigan and nearly $100 million from the U.S. Department of Energy (DOE). In December 2011, Mascoma, through its subsidiary Frontier, established a joint venture with Valero to construct the facility. Construction was scheduled to start in 2012 and be completed by the end of 2013. Highlights from the deal include[vi]:

  • Valero would provide project management to build and operate the facility and hold majority interest.
  • Mascoma, through its subsidiary Frontier, would hold a minority interest.
  • Mascoma would contribute the proceeds from its DOE cooperative agreement award and its State of Michigan grant to the joint venture, while Valero would provide additional financing.

Despite funding from Valero and generous government subsidies, construction has yet to begin. Additionally, Mascoma promised to create 70 jobs by the end of 2012, but the company has thus far created just three new jobs.[vii] With the loss of Valero’s investment, it is likely that the project will be delayed even longer.

While the Kinross facility falls even further behind schedule, Mascoma plans to move forward with the development of a second project in Drayton Valley, Alberta. Mascoma predicts that this facility, which is partially funded by the Canadian government, will produce 19 million gallons of cellulosic ethanol annually.[viii]

Mascoma’s Kinross project is just the most recent example of the struggles the biofuel industry has faced in producing cellulosic ethanol. As the following chart shows, EPA has a history of grossly overestimating cellulosic ethanol production. Moreover, EPA levied $6.8 million in penalties against oil refiners for failing to purchase cellulosic ethanol that does not exist.

 

The EPA lowered the cellulosic mandate to 6 million gallons for 2013, but it appears that production will fall well short once again. As we mentioned in a previous post, the Kior cellulosic ethanol plant in Columbus, Mississippi, which was supposed to fulfill the bulk of EPA’s mandate for 2013, fell 75 percent short of its volumetric estimates in the second quarter of this year.

Despite a combination of federal grants and mandates, cellulosic ethanol remains essentially non-existent. Valero’s departure from with the Mascoma deal delivers a serious blow not just to the Kinross facility, but also to the industry as a whole. If the industry cannot even manage to build the facilities necessary to produce cellulosic ethanol, then refiners should not be expected to blend unrealistic amounts of it into the fuel supply.

IER Press Secretary Chris Warren authored this post.

[i] http://www.vnews.com/news/townbytown/lebanon/8003877-95/mascoma-corp-loses-a-50-million-partner-valero-pulls-out-of-michigan-project

[ii] ibid 1

[iii] http://www.frontier-renewable.com/about/

[iv] http://www.frontier-renewable.com/images/news/2011-12-09-Mascoma-Valero-Kinross.pdf

[v] http://www.instituteforenergyresearch.org/2013/01/11/cellulosic-biofuels-basically-still-nonexistent-but-must-be-purchased-anyway/

[vi] ibid 4

[vii] http://www.michigancapitolconfidential.com/17123

[viii] http://www.ethanolproducer.com/articles/10150/valero-pulls-out-of-mascomas-michigan-proposed-plant-project

Filed Under: Products and Power, Renewable Fuel Standard Tagged With: , , , ,

Fact Check: Dinneen Misleads in USA TODAY

August 20, 2013 by 1 Comment

Renewable Fuels Association President Bob Dinneen penned an op-ed in USA TODAY last week in which he offered several misleading claims about ethanol and the Renewable Fuel Standard (RFS). Dinneen’s piece preceded a USA TODAY editorial calling on Congress to repeal the RFS. Some of Dinneen’s most misleading statements are addressed below.

CLAIM: “Since it was enacted in 2005, U.S. dependence on imported oil has decreased from 60% to 40% largely because of biofuels.” 

FACT: According to Energy Information Administration data, U.S. liquid fuels production increased 39 percent from 2005 to 2012. Biofuels accounted for 39 percent of the increase, while petroleum contributed about 61 percent. The domestic oil boom brought about by hydraulic fracturing, not ethanol, is the true driving force behind America’s reduction in imports.

This oil boom is not over. Earlier in the year, EIA predicted that U.S. crude oil production was on track to surpass imports later this year for the first time in more than 15 years. In its analysis, EIA notes, “This projected change is primarily because of rising domestic crude oil production, particularly from shale and other tight rock formations in North Dakota and Texas.”

We are not going to run out of oil any time soon. In fact, our proven oil reserves are increasing, not falling. U.S. proved crude oil reserves increased by a record level for the second consecutive year, reaching a nearly 24-year high of 7.57 million bpd for the week ending August 9. Moreover, oil production in North Dakota rose to a record 24.6 million barrels in June, a 24 percent jump from a year earlier.

Meanwhile, ethanol production is flat in recent years. Between January 2012 and July 2013, ethanol production dropped from 0.953 million bpd to 0.854 millon bpd, a decline of more than 10 percent in just over a year and a half. Ethanol output decreased despite the federal mandate requiring refiners to blend increasing amounts of ethanol into gasoline.

CLAIM: “Because ethanol costs less than gasoline, it saves motorists more than $1,200 per year.”

FACT: Dinneen has it backwards: ethanol actually costs more than gasoline. This is primarily because ethanol is less energy dense than gasoline. A gallon of ethanol contains about 33 percent less energy than a gallon of conventional gasoline. Indeed, the BTU-adjusted price of E85 (ethanol that contains up to 85 percent ethanol) is consistently higher than regular gasoline. A year ago, regular gasoline cost about 70 cents less than E85 on a miles-per-gallon basis according to AAA’s Daily Fuel Gauge Report. Even with a record corn harvest driving corn prices down this year, E85 still costs about 20 cents more than regular gasoline.

Dinneen is correct that a gallon of ethanol (unadjusted for energy density) costs less than a gallon of gasoline, but that misses the point of why people use gasoline in ethanol in the first place. The point of transportation fuel is to fuel your vehicle and as explained above, when cars run on ethanol, they only get about 70 percent of the fuel economy as when they run on gasoline.

Not only does ethanol reduce fuel economy, but the RFS hurts all Americans, not just motorists. A recent study by the Energy Policy Research Foundation Inc (EPRINC) finds that failure to reform the RFS will cause E10 prices to spike as high as 50 cents to $1.00 per gallon in 2014. EPRINC attributes the increase to “constraints in cost effective opportunities to blend larger volumes of renewable fuels into the U.S. gasoline pool,” otherwise known as the blend wall. Another study by NERA Economic Consulting finds that by 2015 the RFS could raise diesel costs by 300 percent, gasoline prices by 30 percent, and reduce take-home pay for American workers by $580 billion. The facts simply do not support Dinneen’s claim that ethanol saves motorists $1,200 per year.

CLAIM: “By keeping cellulosic ethanol from the marketplace, Big Oil seeks to discourage investors from betting on the next generation of biofuels.”

FACT: The problem is that Dinneen is ignoring both the history and reality of cellulosic ethanol. The only thing keeping cellulosic ethanol out of the market is the price. Cellulosic ethanol is nothing new. In fact, cellulosic ethanol is nearly 200 years old and it was first commercialized over 100 years ago in the United States. Products like cellulosic ethanol aren’t produced in large quantities because they are expensive.

Despite a federal mandate to produce hundreds of millions of gallons of cellulosic ethanol a year, cellulosic ethanol until recently essentially was not produced commercially. In 2010, the Environmental Protection Agency (EPA) required refiners to purchase 5 million gallons of cellulosic ethanol, but not a single drop of commercially available cellulosic ethanol was produced. EPA actually increased the mandate in 2011 to 6.6 million gallons, but again no cellulosic ethanol was produced for commercial use. In 2012, EPA raised the mandate yet again to 8.65 million gallons, but the U.S. produced barely 20,000 gallons. So far this year, 73,272 gallons of cellulosic ethanol have been produced.

Oil companies are not “keeping cellulosic ethanol from the marketplace;” the marketplace isn’t producing it. Furthermore, oil refiners cannot purchase a product that does not exist. Nevertheless, EPA forced refiners to pay about $6.8 million in penalties for failing to blend cellulosic ethanol in gasoline. Not long after EPA handed down the fines, the D.C. Circuit Court ruled that EPA violated the Clean Air Act’s requirement that the agency develop the renewable fuel mandates in an objective, scientific manner. In its decision, the court described EPA’s attitude toward refiners as, “Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers.” If anything, Big Ethanol and EPA seem to be doing everything in their power to keep affordable gasoline from the marketplace.

Conclusion

It is time to end the subsidies for ethanol. Ethanol subsidies increase food and fuel prices on the American people. Instead of trying to force ethanol into the market, people should be able to choose how much ethanol they want to use. Ethanol has a role, but the role should not be dictated by bureaucrats in Washington, D.C.

IER Policy Associate Alex Fitzsimmons authored this post.

Filed Under: Products and Power, Renewable Fuel Standard, Threats Tagged With: , , , , , , ,

In the Pipeline: 8/19/13

August 19, 2013 by Leave a Comment

Woods (Dynegy), Spitzer (Steptoe), Naeve (Skadden), Santa (INGAA), Kelliher (NextEra), Kelly (Akin Gump), Bailey (Cheniere), Moler (Exelon pensioner), Brownell (Comverge or Spectra, whichever you prefer). Say what you want, these people have vested interests that are very much involved with who might be the next Chairman of FERC. So let’s not kid anyone about why they signed that letter.

PoliticoPro (8/16/13) reports: “When a dozen former FERC commissioners lined up last week to defend President Barack Obama’s nominee to lead the agency against a scathing Wall Street Journal editorial, it was no easy task. The Journal’s editorial represented either a purposeful attack or ‘just an ignorance of how commissions work,’ said former FERC Commissioner Nora Mead Brownell, a George W. Bush appointee who organized the rebuttal by both Democratic and Republican former commissioners. The Journal’s July 29 editorial pummeled former Colorado Public Utilities Commission Chairman Ron Binz, calling him ‘the most important and radical Obama nominee you’ve never heard of.’ But it also criticized FERC, saying the agency has gone beyond its ‘narrow legal obligations’ and ‘deputized itself as a Wall Street regulator.’”

Our own Bob Murphy is from Rochester. It must be something in the groundwater.

The Democrat and Chronicle (8/13/13) reports: “The 20 solar panels Jeffrey Punton installed in the backyard of his Weldon Street home won’t ever generate enough electricity to cover their cost. Which is the whole point. He means them as a cautionary tale, one that Punton said cost him $13,000 and received another $29,500 in state and federal subsidies and tax credits. He installed the panels in 2009, and they work: he has generated about 15,000 kilowatt hours of electricity in four years, saving several hundred dollars a year on his energy bill. That’s a lot of savings, but barely enough to recoup his initial investment over several decades, and not enough to cover the public money involved. It’s that public money that chafes him, evidence of governmental intrusion in the marketplace.”

“Let me die in this old uniform in which I fought my battles. May God forgive me for ever having put on another.”

The Hill (8/15/13) reports: “A group run by a former GOP lawmaker that advocates for a carbon tax has lured Americans for Prosperity’s grassroots director to lead its outreach efforts. Laquan Austion will join ex-Rep. Bob Inglis’s (R-S.C.) Energy and Enterprise Initiative as its new director of outreach, the organization announced Thursday. The move is an interesting one, as the AFP strongly opposes a carbon tax, which Inglis’s group is pushing. ‘E&EI is blazing the trail for free-market solutions to a demanding issue that Americans care about,’ Austion said in a statement. ‘I’m excited for the opportunity to contribute to the growing coalition of conservatives offering the country real solutions for energy security and climate change.’ A carbon tax is a fee imposed either at fossil fuel extraction or generation with the goal of reducing greenhouse gas emissions. Under most schemes, some revenues are returned to residents to offset higher energy costs.”

So the wind guys and the solar crew is on the Binz bandwagon. How much more obvious does it have to get?

The Daily Caller (8/6/13) reports: “The bill passed and the Colorado PUC voted to have Xcel shut down six coal-fired generators and replace them with natural gas-fired ones. However, the Denver Post reported that prior to the enactment of the bill, Binz had engaged in meetings with executives in the natural gas industry and from Xcel, according to government documents. ‘By early March 2010, he was even reassuring Xcel officials on how the commission would treat cost recovery under draft language — eventually crowing, ‘The eagle has landed. The commission and Xcel have agreed on language for cost recovery,’’ the Post reported.”

Filed Under: Blog, In the Pipeline Tagged With: , , , , , ,

Working Group Broke the Rules With Its 'Social Cost of Carbon' Estimate

August 19, 2013 by 3 Comments

In my recent testimony to the Senate Environmental and Public Works committee, I explained that (among its other problems) the Obama Administration’s Working Group on climate change had explicitly ignored the Office of Management and Budget (OMB) guidelines stating that cost/benefit analyses had to be conducted using both a 3 percent and a 7 percent discount rate. Rather than following these instructions, the Working Group chose to report its estimate of the “social cost of carbon” at 3 percent and 5 percent. This was very significant, I explained to the senators, because the higher the discount rate, the lower the dollar impact of projected climate change damages. I said that if the Working Group had followed OMB’s guidelines, it very well could have come up with social cost of carbon estimates near zero, or even negative—meaning the entire case for regulating carbon dioxide emissions would collapse.

A colleague recently sent me the information pertaining to a new rule proposed by EPA, which illustrates just how amazing the Working Group’s omission is. Look at the following screen shot, which is an excerpt from EPA’s discussion of the costs and benefits of the rule (which regulations emissions from steam electric power plants):

As the above table shows, EPA is being a dutiful federal agency, following Executive Branch guidelines on how to calculate costs and benefits—it reports its findings using both a 3 percent and a 7 percent discount rate. Yet as the footnote explains, when reporting the benefits of reducing CO2 emissions, the EPA actually can’t use a 7 percent discount rate, because an estimate of the SCC (social cost of carbon) for a 7 percent rate is “not available.” Why is it not available? Because the Working Group explicitly ignored the OMB guidelines, and only reported the figures for 3 percent and 5 percent.

We thus have an absurd situation, in which EPA and other regulatory agencies will be following the rules and calculating benefits and costs at both the 3 percent and 7 percent discount rates. Yet, when they express the “social benefits” of reducing greenhouse gas emissions at the 7 percent rate, they are actually going to plug in the wrong number, and explain in a footnote why they are doing so. To repeat, this is important, because the “right” number would show that there are virtually no “social benefits” from reducing greenhouse gas emissions.

As I have explained elsewhere, there are far more problems to the Obama Administration’s computer-model-case against carbon, than just the choice of discount rate. Yet the knots into which the federal government has tied itself, in order to avoid revealing the truth about the actual economic literature, is quite revealing—not to mention hilarious.

IER Senior Fellow Robert P. Murphy authored this post.

Filed Under: Emissions Standards, Products and Power, Threats Tagged With: , , ,

In the Pipeline: 8/16/13

August 16, 2013 by Leave a Comment

You got to know when to hold ’em, know when to fold ’em…

The Boston Globe (8/9/13) reports: “A group of environmentalists has dropped its campaign to place a so-called carbon tax on the next statewide ballot, citing the complexity of the issue, weak fund-raising, and potential constitutional challenges to the question. The group, the Committee for a Green Economy , had hoped to place a question on the 2014 ballot asking voters to approve a new tax on gasoline, heating oil, and other fossil fuels based on the amount of carbon dioxide they produce, with the aim of reducing pollutants that contribute to climate change. The committee, however, failed to file a petition with Attorney General Martha Coakley by Wednesday’s deadline, the first step in qualifying an initiative for the ballot.”

It’s never fun to say I told you so with so many Spaniards suffering as a result of their inept government.

Salon (8/14/13) reports: “The Spanish government is in debt to its power producers to the tune of 26 billion euros, the results of years spent regulating costs. To make up the difference, it’s imposing a levy on rooftop solar panels — effectively negating the economic benefit of generating clean energy. The tax will more than triple the time it takes for consumers to recoup their investment in rooftop panels, reports Reuters. It will also prevent people from selling any extra energy they generate that way back to the grid. Those who leave their panels up without connecting them to the grid, which is how the government will monitor and tax their energy production, face a fine of between 6 million and 30 million euros.”

Intermittent is a four letter word. 

The New York Times (8/14/13) reports: “The 21 turbines at the Kingdom Community Wind farm in Vermont soar above Lowell Mountain, a testament in steel and fiberglass to the state’s growing use of green energy. Except when they aren’t allowed to spin at their fastest. That has been the case several times in the farm’s short existence, including during the record July heat wave when it could have produced enough much-needed energy to fuel a small town. Instead, the grid system operator held it at times to just one-third of what it could have produced.”

We look forward to Admiral McGinn supporting opening ANWR, the OCS, and onshore as part of his readiness efforts.

Politico Pro (8/15/13) reports: “The Navy’s new energy chief doesn’t have any uncertainty about the scope of his mission. As the leader overseeing the service’s push to develop advanced biofuels and deploy more renewable energy, retired Vice Adm. Dennis McGinn says he has ‘to try to take the politics out of something which is essentially a national security issue.’ It’s no easy task. He faces production issues, technological barriers, increasingly tight budgets and scrutiny from congressional Republicans unhappy with the military’s green spending. But McGinn — the recently confirmed assistant secretary of the Navy for energy, installations and the environment and outgoing president and CEO of the American Council on Renewable Energy — says it all comes down to numbers.”

The most transparent administration in history.

The Daily Caller (8/15/13) reports: “A federal judge said that the Environmental Protection Agency’s use of private emails account may have been an attempt to skirt public scrutiny and transparency laws. The court decision comes after investigation uncovered that top agency officials were using such accounts to conduct official business. ‘The possibility that unsearched personal email accounts may have been used for official business raises the possibility that leaders in the EPA may have purposefully attempted to skirt disclosure under the FOIA,’ wrote U.S. District Judge Royce Lamberth in his decision.”

Stop the RINsanity!!!!

The USA Today (8/15/13) reports: “When members of Congress decided in 2007 to require that Americans put 36 billion gallons of ethanol in their gas tanks annually by 2022, they must have thought there was an award for bad public policy. The idea never made the slightest sense. The law, an expansion of a mandate adopted two years earlier, called for impossibly large quantities of corn to go into fuel production rather than onto people’s tables, driving up food prices. This year, the mandate requires 16.6 billion gallons of ethanol, absurdly consuming 37% of the nation’s corn crop and requiring farmland roughly equal to the size of Kentucky. Now unforeseen events are adding a tragicomic twist.”

Happy Friday.

Gizmodo (8/16/13) reports: “Stop me if you heard this before but an electric car and an electric pole walk into a bar… Okay, seriously. This is one of those ridiculous local news stories that are too perfect to be true but actually are. A Tesla Model S crashed into a utility pole in Tennessee and caused a local blackout. An electric car causing a blackout by crashing into a pole is a little funnier than a regular car driving into a gas station, right? The crash, which occurred in the afternoon, was actually a result of a DUI. A 34-year-old woman was behind the wheel at the time and said she was ‘messing with the radio’ (that darn giant touchscreen!) when the crash happened. When police arrived on scene, the electric car was 100 feet away from the downed utility pole and power was out locally: In order to load the crashed vehicle onto the flatbed, officers apparently had to obtain ‘technical instructions’ in how to turn off the Model S.”

Filed Under: Blog, In the Pipeline Tagged With: , , , , , ,

In the Pipeline: 8/15/13

August 15, 2013 by Leave a Comment

Question: Would Warren & Co. go all in on wind if they weren’t able to feed themselves greedily from the public coffers?  

The Daily Caller (8/13/13) reports: “A subsidiary of the Warren Buffett-owned MidAmerican Energy Holdings is looking to capitalize on federal tax subsidies by installing 448 wind turbines across five Iowa counties in order to generate up to 1,050 megawatts of power by 2015. Construction on the wind farms is scheduled to begin next month, meaning MidAmerican will qualify for generous wind tax credits offered by the federal government. ‘MidAmerican Energy Company does plan to use federal wind production tax credits for the recently announced wind expansion,’ a company spokeswoman told The Daily Caller News Foundation in an email. ‘The specific amount is not available.’”

When government becomes the judge, jury, and executioner, it really limits your options. You either play ball or perish. Really though, you can’t blame the refiners for not wanting to participate in Soviet style mandates.  

The Wall Street Journal (8/14/13) reports: “Last week, the Environmental Protection Agency issued its annual renewable-fuels mandate, telling refineries how much ethanol they must blend into the nation’s gas supply. This quota, which grows each year, is becoming a horrific financial burden on the industry, forcing many refineries to buy federal ethanol ‘credits’ to satisfy the rules. The skyrocketing price of those credits is adding hundreds of millions of dollars to refineries’ annual costs. So it was more than a little curious that the EPA, as part of its rule, announced it was exempting just one mystery refinery (out of 143) from this year’s mandate. The dispensation amounts to a significant financial favor to one lucky player, as I wrote in the Journal on Friday. Further reporting has revealed that the refinery is Alon USA Energy’s Krotz Springs facility in Louisiana. There’s reason to wonder why Krotz Springs alone got a deal.”

All the leaves are brown, and the sky is grey. San Francisco regulators, refuse to hike the rates. Green schemers for now, they’re are being held at bay. California green dreamin’, will wait another day.

CBS SF Bay Area (8/14/13) reports: “Proponents of a green power alternative to PG&E in San Francisco are frustrated, but not deterred by delays to the city’s long-awaited renewable energy program. However, this week’s setback when the SF Public Utilities Commission refused to move forward on a key approval has sent the program back to the drawing board. For nine years, the city has been putting together CleanPowerSF, which would cost customers more than PG&E, but would provide renewable or green energy.Supervisor John Avalos, a big supporter, said it’s been an uphill battle to come up with a program palatable for regulators, who on Tuesday, refused to sign off on a rate schedule.”

Come on Josh, if you’re going to keep blatantly promoting “misinformation” the least you could do is say it on the record.

The Washington Free Beacon (8/14/13) reports: “Environmentalist filmmaker Josh Fox grew frustrated during a recent public radio interview when asked about apparent falsehoods in his Oscar-nominated 2010 documentary Gasland. Fox asked an interviewer with Aspen public radio station KAJX to go ‘off the record’ so he could explain why he represented a gas extraction lease created by a group of Pennsylvania landowners as a $100,000 offer from a gas company to extract natural gas from his land. The document presented in Gasland was a draft of a lease that Northern Wayne Property Owners Alliance (NWPOA), a Pennsylvania landowners group, offered to gas companies exploring potential shale drilling operations in the area hoping to secure favorable terms for landowners, according to NWPOA members. It was not, as Fox claimed in the film, an offer from one of those companies. The group also says Fox was never a member, as he told KAJX on Monday.”

 

 

Filed Under: Blog, In the Pipeline Tagged With: , , , , , , ,

In the Pipeline: 8/14/13

August 15, 2013 by Leave a Comment

Watch as the RFS advocates come crawling to Washington and beg them to prop up their industry by forcing you to buy their product. 

Fox News (8/13/13) reports “Only in Washington can an expensive, unnecessary regulation be considered common sense. The Obama administration is digging in its heels when it comes to repealing harmful energy regulations that increase consumer costs with little benefit to the environment. The Renewable Fuel Standard (RFS) is a classic example of hugely misguided energy policy, but to the Obama administration and its environmentalist allies, the RFS is a beneficial regulation aimed at curbing emissions and safeguarding against climate change.What they don’t say, but mean, is that it artificially drives up the cost of gasoline and when that happens, people can’t afford to drive as much. Remember how energy prices need to ‘skyrocket?’ Well, they are. ‘The backbone of our policy is the Renewable Fuel Standard,’ said top Obama energy adviser Heather Zichal at an event last week, adding that ‘calls to repeal the standard are nothing but shortsighted.’”

Elon Musk, having mastered the art of the federal fleece, now sets his sights on California taxpayers. Those high speed rail rent seekers better not underestimate this guy, or they just might lose their gravy train.

Business Week (8/13/13) reports: “‘L.A. to S.F. in 30 minutes?’ the front page of the Los Angeles Times asked this morning, reporting on the promise of Hyperloop, the conceptual superfast, solar-powered, tubular transit system that Elon Musk unveiled yesterday. The news came just a day after another L.A. Times piece about the potential of speedy travel up and down California, that one titled: ‘Shovel-ready bullet train construction delayed again.’ As the blog Curbed Los Angeles put it, ‘Nice timing, Musk.’ The contrast between Musk’s futuristic option for bridging Los Angeles and the Bay Area, and the much-delayed, over-budget, fast train that the state already has in the works, couldn’t have seemed starker or more striking. And that’s the point.”

At least she recognizes it’s much harder to be carbon neutral than just buying the next toy with a pretty green leaf on it.

The Bulletin of Atomic Scientists (8/7/13) reports: “The dynapod appeals to conservation-minded people in the same way that wind turbines and biofuel-powered cars and hand-cranked radios do: They’re hard, shiny machines that purport to produce “free” energy. Not just free in terms of cost and independence (because you no longer have to pay a big, bad corporation for electricity or gasoline), but also free from guilt. Because you’re not polluting the air, right? Unfortunately, things aren’t that simple. Before you even climb aboard your dynapod or generate your first watt of green energy, you’ve already stomped another carbon footprint into the sands of time through the manufacturing process. And until the energy embodied in machines, vehicles, buildings, gadgets, food, clothing, and other consumer purchases comes to be understood as part of total energy consumption, people can’t make well-reasoned choices about how to reduce their climate impact.”

Wait, you’re telling me the scientists could make conclusions based on flawed premises?

Forbes (8/13/13) reports: “Perseveration on global warming naturally inclines one to seek out other areas of  “science” where things aren’t exactly what they so obviously are, which brings me to the remarkable work of the most important toxicological scientist you have never heard of,  Dr. Ed Calabrese of the University of Massachusetts. His work, painstaking and seemingly obscure, is upsetting just about everything we ‘know’ about cancer and other illnesses commonly associated with environmental ‘pollutants.’ If taken to its logical conclusion, it could derail much of Washington’s regulatory bureaucracy, particularly the EPA’s. Not that this is going to happen overnight, but as Calabrese’s work is increasingly accepted (as has been happening in recent years), the current regulatory paradigm will be forced to adjust.”

Hear that popping noise? That’s Harry Reid’s head exploding.

The Associated Press (8/13/13)reports: “In a rebuke to the Obama administration, a federal appeals court ruled Tuesday that the Nuclear Regulatory Commission has been violating federal law by delaying a decision on a proposed nuclear waste dump in Nevada. By a 2-1 vote, the U.S. Court of Appeals for the District of Columbia ordered the commission to complete the licensing process and approve or reject the Energy Department’s application for a never-completed waste storage site at Nevada’s Yucca Mountain.”

This just in: the science is settled.

E&E News (8/13/13) reports: “Scientists know that the Greenland ice sheet is contributing to rising sea levels, but many of the details about how its ice is driving drastic change remain a mystery. A new study aims to fill in a piece of the puzzle by concluding that the gliding of ice on meltwater that has seeped through to bedrock is not a significant factor with sea-level rise. The research dampens a long-held fear by questioning a hypothesis that Greenland’s surface meltwater — flowing through well-like holes to the ground — allows ice to rapidly ride on it like a water slide to the sea. While the gliding of ice from sunken meltwater is happening and is changing the character of Greenland’s ice in general, the lubrication dynamic will only contribute about 8 millimeters of sea-level rise through 2200 under a worst-case scenario. That would be no more than 5 percent of the estimated contribution from Greenland’s ice sheet as a whole, according to the study published yesterday in the Proceedings of the National Academy of Sciences. ‘If we’re right [Greenland’s slippery slopes] are not as slippery — and therefore as worrying — as we first thought,’ Tamsin Edwards, a co-author of the study and a scientist at the University of Bristol, said in a blog post.”

You remember Cathy Zoi. She’s the one who ordered the NREL hit piece on our good friend Gabriel Calzada. It looks like she is more successful talking about green jobs than creating them. We wish her luck.

Greentech Media (8/12/13) reports: “Cathy Zoi is no longer the Chief Strategy Officer at Tom Siebel’s C3 Energy. Insiders have informed Greentech that she has left the firm. C3 management has not responded to inquiries, but C3’s front desk confirms the departure.  As Jeff St. John reported, ‘C3 Energy, the Silicon Valley startup founded by software billionaire Tom Siebel, has quietly been building on an audacious promise: a big data integration and analytics engine, hosted in the cloud, that can aggregate and put to use all of the world’s information, practically speaking, as it pertains to the complexities of big energy systems.’ Zoi joined the utility data analytics firm after a short stint at investment firm Silver Lake Kraftwerk. Zoi has not responded to our inquiries as to why she has left the firm.”

 

Filed Under: Blog, In the Pipeline Tagged With: , , , ,

In the Pipeline: 8/13/13

August 15, 2013 by Leave a Comment

Broken promises. SEC investigations. Empty lots. No product. In other words, pretty standard stuff for anything with the word “Green” in it.

The Washington Post (8/10/13) reports: “Just off the legendary Highway 61, where crop-dusters perform acrobatics above billboards for Mississippi Delta casinos, is the place where Virginia gubernatorial candidate Terry McAuliffe pledged to build a $60 million factory for his electric-car company. On a recent summer day, a bird was skittering over patches of weedy gravel at the vacant site of what is supposed to be GreenTech Automotive’s future plant. Virginia gubernatorial candidate’s “green” car company fails to pay desired political dividends. In Horn Lake, Miss., GreenTech runs a temporary assembly plant in an old elevator factory. There, fewer than 100 workers are producing no more than one car every two or three days, according to current and former company employees.”

Passing on the mantle.

The Washington Times (8/12/13) reports: “China will become the world’s largest importer of crude oil in October, surpassing the U.S. for the first time as the Asian giant’s rising consumer class of drivers grows increasingly thirsty for fuel, the U.S. Energy Information Administration is projecting. China already is the largest importer of oil from the troubled Middle East, taking away a distinction that plagued the U.S. since the 1970s. Its ascendance as the world’s largest importer — even as U.S. dependence on Middle Eastern oil declines to negligible levels — could transform regional and world politics as the focus of global defense efforts for decades has been keeping open the vital oil shipping lanes leading from the Persian Gulf.”

Chinese drivers may be pushing their need for imports up, but our increased oil production is decreasing our reliance on imports. 

The Institute for Energy Research (8/13/13) reports: “The Energy Information Administration (EIA) reports that the China is expected to surpass the United States in oil imports this October and to lead the world in total oil imports in 2014. As the graph below shows, the United States, on a net basis (imports less exports), has decreased its net oil imports fairly dramatically over the last several years. There are several reasons for this decline. Most importantly, U.S. oil production is up. But, other reasons include increased exports of petroleum products, lower or flat liquid fuels demand, and biofuels production that has generally been increasing. China, unlike the United States, has a heavily growing demand for petroleum products and much lower production growth.”

Stop me if you’ve heard this one before.

The Washington Free Beacon (8/12/13) reports: “The U.S. Department of Energy (DOE) has suspended stimulus payments to a major green energy company after the company said it is having trouble finding financing and may have to declare bankruptcy. ECOtality admitted that possibility in a filing with the Securities and Exchange Commission (SEC) last week. Lackluster sales caused revenues to fall significantly short of its expenses, the company said. ‘Although the company is currently exploring options for a restructuring or sale of the entire business and/or assets of the company, the company may need to file a petition commencing a case under the United States Bankruptcy Code as part of any such process or otherwise in the very near future,’ ECOtality said in its SEC filing. ECOtality has received more than $100 million in federal funds, the bulk of which came in a $99.8 million stimulus award for the construction of its electric vehicle charging stations.”

Harry Reid throws a really scary Halloween party in August. If you notice, there is not a soul invited who actually cares about affordable, reliable energy.

National Clean Energy Summit reports: “The National Clean Energy Summit has been the national stage for clean energy development discussions for six years and serves as the country’s most visible and influential gathering of leaders and top policymakers. The day-long clean energy summit is hosted by Senate Majority Leader Harry Reid (D-NV), the Center for American Progress, the Clean Energy Project, MGM Resorts International, and the University of Nevada, Las Vegas. National Clean Energy Summit 6.0: Energizing Tomorrow will focus on empowering individuals, governments, and businesses to continue our transition to a clean energy future. This year’s conference will highlight solutions needed to energize our clean energy economy for tomorrow. By identifying hurdles facing clean energy development today and discussing the solutions needed to clear these hurdles, we can energize tomorrow.”

The battle lines are forming. We’re glad these folks are in the fight with us.

Filed Under: Blog, In the Pipeline

Sorry Ethanol Lobby, RFS Does Not Promote “Free Markets”

August 14, 2013 by Leave a Comment

Growth Energy, an ethanol industry group, issued a misleading statement yesterday in response to news that refiners requested a partial waiver of the 2014 Renewable Fuel Standard (RFS). The headline reads, “Big Oil Files Waiver to Cap Ethanol, Block Free Market Competition.”

There is nothing “free market” about requiring someone to purchase a product, but that is exactly what Growth Energy claims. The RFS requires refiners to blend increasing amounts of ethanol into gasoline, with the goal of blending 36 billion gallons by 2022. This mandate amounts to a subsidy for ethanol producers, one that distorts the market and ultimately harms consumers.

Tom Buis, CEO of Growth Energy, claims, “Biofuels are a clean burning, reliable and sustainable alternative and it is time we start recognizing their cost savings and numerous benefits and end our addiction to a fossil fuels and Big Oil’s price gouging.” Let’s unpack these claims one at a time.

First, Buis describes ethanol as “clean burning,” but fails to point out that ethanol can emit more greenhouse gas emissions than conventional gasoline. A study published in Science finds that corn-based ethanol nearly doubles GHG emissions over the next three decades and continues to increase emissions for the next 167 years. The Union of Concerned Scientists, a liberal environmental group, cautions, “If done wrong, the production of biomass for biofuels like ethanol could destroy habitats, worsen water or air quality, limit food production and even jeopardize the long-term viability of the biomass resource itself.”

Second, far from providing “cost savings,” ethanol is actually more expensive than conventional gasoline. Ethanol contains about 33 percent less energy than conventional gasoline, which means that fuel economy declines as ethanol content rises. Indeed, the BTU-adjusted price of E85 (ethanol that contains up to 85 percent ethanol) is about 16 cents higher than regular gas. At this time last year, when both corn prices and gas prices were higher, E85 was about 70 cents more expensive than E10.

Third, Buis offers scant evidence to support his “price gouging” accusations. As the Institute for Energy Research (IER) explains, less than five percent of gas stations are owned by the “big oil” companies that Buis decries. In reality, the price of gasoline is determined largely by the price of crude oil, a commodity traded worldwide. U.S. monetary policy that increases the money supply through quantitative easing provides a ripe environment for hedge funds to bet on commodity prices, including crude oil.

Congress passed the RFS under the assumption that gasoline use would rise indefinitely, but consumption has actually declined in recent years. With consumption stagnant, the only way refiners can add increasing amounts of ethanol is by blending more than 10 percent into gasoline. But most cars are not certified to run on gas with more than 10 percent ethanol, prompting several car companies to warn that damage due to improper fueling voids any warranties. This problem is called the blend wall.

In a free market, the blend wall would never be an issue. Refiners would adjust ethanol volumes in response to supply and demand. But under the current system, refiners are left with little choice but to increase exports or reduce production, both of which would raise gas prices on American motorists. In fact, NERA Economic Consulting finds that by 2015 the RFS will increase diesel costs by 300 percent, gasoline prices by 30 percent, and reduce take-home pay for American workers by $580 billion.

Recognizing the imminent blend wall, the Environmental Protection Agency (EPA) signaled a willingness to reduce required ethanol volumes in 2014. In response, the American Fuel & Petrochemical Manufacturers (AFPM) and the American Petroleum Institute (API) asked EPA to use its authority to reduce the 2014 mandate by 3.35 billion gallons. This would be a tangible first step toward a freer market and lower gas prices.

IER Policy Associate Alex Fitzsimmons authored this post.

Filed Under: News, Products and Power, Renewable Fuel Standard, Threats Tagged With: , , , , ,

As Economy Lags, Shale Boom Spurs Rapid Job Growth

August 14, 2013 by Leave a Comment

While most of the U.S. economy endures a slow recovery process, the energy sector continues to flourish. Job opportunities in oil and natural gas increased by 40 percent from 2007 to 2012, according to new data from the Bureau of Labor Statistics.[i] Compare this to just 1 percent growth for total private-sector employment over the same period.  The key to this job growth has been the boom of domestic energy production on state and private lands.

In 2012, the U.S. recorded the largest oil and natural gas increases in the world, as well as the largest increase in oil production in American history. U.S. crude oil production increased from around 5 million barrels per day in 2007 to nearly 6.5 million barrels per day in 2012, according to the Energy Information Administration (EIA). Natural gas production also increased from 19,266 billion cubic feet in 2007 to 22,902 billion cubic feet in 2011.

As a result of the domestic energy boom, oil and gas companies added 162,000 jobs from 2007 to 2012. The largest job growth has been in the support sector, which includes exploration, excavation, and well construction. The support sector alone has added 102,000 jobs since 2007, employing a total of 286,000 people by the end of 2012.[ii]

This rapid growth does not appear to be slowing down anytime soon, as proved reserves[iii] in the U.S. continue to rise. A recent report from EIA shows that proved oil reserves increased by 15 percent (nearly 3.8 billion barrels) in 2011, the largest volumetric increase in U.S. history. Proved reserves of wet natural gas increased by 31.2 trillion cubic feet (TCF), the second largest increase since 1977. [iv]

The development of America’s vast energy resources is occurring primarily on state and private lands. On federal lands, a sluggish permitting process (228 days on average) continues to stonewall energy production and job creation. As a result, oil and natural gas production declined by 15 percent on federal lands between 2010 and 2012.

The most notable success story has been North Dakota, where it takes just 10 days on average to get a permit to drill. Production on state lands in the Bakken and Three Forks shale plays has skyrocketed in recent years. From 2007 to 2012, North Dakota’s crude oil production increased from 124,000 barrels per day to 663,000 barrels per day,[v] an increase of 434 percent. Production will most likely continue to rise, as proved oil reserves in North Dakota increased by 771 million barrels from 2010 to 2011. The increase in domestic energy production is a driving force behind the state’s 3.1 percent unemployment rate, the lowest in the nation.[vi]

Thanks to domestic energy boom on state and private lands, oil and gas companies are creating jobs at a time when the rest of economy continues to sputter. Opportunities in the oil and gas sector have expanded despite policies that restrict energy development on federal lands. Opening up federal lands to oil and gas development would provide a huge boost to the economy and put even more Americans back to work.

IER Press Secretary Chris Warren authored this post.

[i] http://www.eia.gov/todayinenergy/detail.cfm?id=12451&src

[ii] ibid i

[iii] Proved reserves are resources that are recoverable under current economic and operating conditions.

[iv] http://www.eia.gov/naturalgas/crudeoilreserves/index.cfm

[v] http://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=PET&s=MCRFPND2&f=A

[vi] http://data.bls.gov/timeseries/LASST38000003

Filed Under: News, Products and Power, Renewable Fuel Standard, Threats Tagged With: , , , , , , ,
Previous
Next