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The Costs of Tier 3 Regulations

April 28, 2012 by 1 Comment

 

The Environmental Protection Agency (EPA) is moving ahead with its efforts to impose a “Tier 3” tightening of standards that would further reduce the permissible levels of sulfur in refined gasoline. According to a study by Baker & O’Brien, Tier 3 standards would impose upfront costs on refiners of just under $10 billion, and cause a permanent increase in refining costs of 6 to 9 cents per gallon of gasoline. These economic harms would come with only a relatively small reduction in sulfur content, because previous regulations have already greatly reduced the sulfur content in gasoline.

Tightening Standards

In 1999 EPA issued its Tier 2 regulatory framework, which for the first time including all passenger vehicles (including SUVs and light-duty trucks) to the same emission standards as cars. The Tier 2 framework also began treating “vehicles and fuels as a system,” so that standards for tailpipe emissions were linked to stringent requirements on sulfur concentrations in gasoline. (It is easier for passenger vehicles to comply with emission limits, if the gasoline they use has a reduced sulfur content.)

In its December 1999 document, EPA proudly announced how drastic the Tier 2 measures were: “These new standards require passenger vehicles to be 77 to 95 percent cleaner than those on the road today and reduce the sulfur content of gasoline by up to 90 percent.” Specifically, here is their discussion of the sharp reduction in permissible sulfur concentrations:

Beginning in 2004, the nation’s refiners and importers of gasoline will have the flexibility to manufacture gasoline with a range of sulfur levels as long as all of their production is capped at 300 parts per million (ppm) and their annual corporate average sulfur levels are 120 ppm. In 2005, the refinery average will be set at 30 ppm, with a corporate average of 90 ppm and a cap of 300 ppm….Finally, in 2006, refiners will meet a 30 ppm average sulfur level with a maximum cap of 80 ppm.

To clarify, EPA makes a distinction between the average sulfur content for the entire mix of output, and the maximum permissible sulfur content on any particular product. As the earlier EPA quote illustrated, the Tier 2 regulations, when fully phased in over a few years, would reduce gasoline sulfur content by up to 90 percent, depending on the benchmark.

Yet even though the Tier 2 standard has already reduced gasoline sulfur content some 90 percent, down to an average level of 30 parts per million (ppm), EPA wants to ratchet up the standard yet again. Although it hasn’t explicitly announced the specific standard in its Tier 3 regulations, EPA officials (e.g. Margo Oge in late January of this year) have publicly stated that the standard will probably be 10 ppm. That is to say, on top of the 90 percent reduction in sulfur content that Tier 2 involved, the move to Tier 3 (if Oge is correct in her statement) would require a further reduction of 67 percent from the Tier 2 baseline.

The Baker & O’Brien Analysis

The American Petroleum Institute (API) commissioned Baker & O’Brien to perform a study that was originally released in July 2011 on the impact of Tier 3 regulations on the refining sector and gasoline market. In light of criticism from EPA—claiming that the original study should not have included a scenario considering a 5 ppm standard, but instead a looser 10 ppm standard—API commissioned Baker & O’Brien to issue a March 2012 addendum. In this addendum, the analysts consider a “Case 4” that keeps all other regulations constant, and only changes the gasoline sulfur content from the current 30 ppm down to 10 ppm.

Before reporting the results of the addendum, we should point out that the regulatory uncertainty itself is costly and inhibits the U.S. refining sector, and thus raises gasoline prices relative to what would occur in a more predictable setting. After all, even now EPA hasn’t officially said what the Tier 3 standard will actually be, so the original Baker & O’Brien study—which was released in July 2011—can hardly be faulted for including a spectrum of scenarios, one of which was more draconian than what EPA officials are now telling us will likely be the actual rule.

In any event, the new Case 4 scenario—which models only the tightening of gasoline sulfur standards, in light of the recent remarks from EPA officials—projects the upfront compliance costs to refiners at $9.8 billion. Furthermore, the total annual compliance cost (which includes capital recovery) is estimated at $2.4 billion. Spread out over the range of projected gasoline production, this higher operating cost works out to 6 to 9 cents per gallon in increased costs. (The addendum does not explicitly model the gasoline market directly, and thus does not say how much of this burden will be borne by shareholders in the refining sector versus motorists in the form of higher prices at the pump.)

Ironically, the study also finds that even under the milder Case 4 assumptions, refiners would be forced to alter their activities in ways that would end up emitting an extra 1.7 million tons of carbon dioxide per year. This counteracts one of the primary purposes of the program, which is to produce gasoline low in sulfur and thus make vehicle emissions targets (including CO2 emissions) easier to achieve.

Conclusion

The EPA’s Tier 2 standards for gasoline have already reduced its sulfur content by 90 percent relative to 1999 levels. EPA’s consideration of further tightening the regulations is harmful to the refining sector both for its ambiguity—we still don’t know what the rule eventually will be—but also because it will likely impose billions of dollars in upfront and annual compliance costs on the sector. Refiners won’t stay in business if they are losing money, and so the new measure will reduce growth and employment in the refining sector, while raising gasoline prices for motorists.

Filed Under: Facts, News, Products and Power, Tier 3 Standards Tagged With:

Impact of EPA’s Regulatory Assault on Power Plants–April 19 Update

April 27, 2012 by 1 Comment

“So if somebody wants to build a coal-fired plant they can. It’s just that it will bankrupt them…”
– Barack Obama speaking to San Francisco Chronicle, January 2008

**Update April 19, 2012**

Thirty-four gigawatts (GW) of electrical generating capacity are now set to retire because of the Environmental Protection Agency’s (EPA) Mercury and Air Toxics Rule (colloquially called Utility MACT)[i] and the Cross State Air Pollution Rule (CSAPR)[ii] regulations. Most of these retirements will come from coal-fired power plants, shuttering nearly 10 percent of the U.S.’s coal-fired generating capacity.

This report is an update of a report we issued in October 2011.[iii] Last October in the original report, we calculated that 28.3 GW of generating capacity would close as a result of EPA’s regulations. At the time, we warned that “this number will grow as plant operators continue to release their EPA compliance plans.” Unfortunately, this statement has proven to be true. This update, a mere four months later, shows that 33.8 GW of electrical generating capacity will close—a 5.5 GW increase.

According to EPA, their modeling of Utility MACT and CSAPR indicates that these regulations will only shutter 9.5 GW of electricity generation capacity. But events in the real world already show that EPA’s modeling is a gross underestimate.

To calculate the impact of EPA’s rules, we first assumed that EPA’s modeling of the regulation correctly predicted which power plants would close as a result of the regulations. Then, we looked at statements, filings, and announcements from electrical generators where the generators were closing power plants and in which they cited EPA’s regulations as the precipitating cause of the plant closures. We then compared EPA’s modeling outputs with the announcements and created a master list of plant closures as the result of EPA regulations (the master list is below).

Combining actual announcements with EPA’s modeling shows that EPA’s modeling grossly underestimates the actual number of closures. As noted above, EPA calculated that only 9.5 GW of electrical generating capacity would close as a result of its rules. But the reality is that nearly 34 GW of power generating capacity will close—over three times the amount predicted by EPA modeling. Worse, as utilities continue to assess how to comply with EPA’s finalized Utility MACT rule and CSAPR, there will likely be further plant closure announcements in the coming weeks and months.

Since Our First Report was Released in October, an Additional 5 GW of Retirements Due to EPA Regulations Have Been Announced

Operators in Georgia, Maryland, Michigan, New Mexico, Ohio, Pennsylvania, and Wisconsin   have announced new closures since we first published our closure list four months ago.  Additionally, operators in Minnesota announced they would cease plans to convert a coal plant to natural gas, letting the plant retire due to EPA regulations.[iv]  In just six months, retirements related to EPA regulations have grown by 5 GW, more than the 4.7 GW of closures EPA predicted for the entire Utility MACT.

NERC is Concerned about Reliability even though It Underestimates the Amount of Closures

It should be further noted that the North American Reliability Corporation’s (NERC) modeling of the MACT rule and CSAPR estimate that under the worst case, or “strict” scenarios, 16.3 GW of electricity capacity will be closed due to the regulations, and the Department of Energy’s (DOE) “stringent” test shows that only 21 GW of generating capacity will be closed. Even though NERC’s estimate is much lower than what our analysis shows, NERC is concerned that the closures will cause electricity reliability problems.[v] How much greater will the reliability problems be, given that retirements appear to be twice as great as NERC estimates?

Announced and EPA Projected Retirements Are Significantly Higher than DOE’s Worst Case Scenarios

In public statements and the Utility MACT itself, EPA relies heavily on a DOE study claiming that even under a theoretical “stringent” test, EPA regulations would only close 21 GW of generation.  EPA has since claimed this study proves regulations will not threaten reliability. Our analysis, however, shows that between EPA projections and operator announcements, nearly 34 GW of generation will close—almost 13 GW more than DOE’s supposedly ultra-strict test scenario.

Michigan and Ohio Hit Worst By Latest Announcements

In our updated analysis, the vast majority of new announced retirements will occur in Michigan and Ohio. Operators in Michigan have announced more than 1 GW of closures due to EPA regulations.[vi] Michigan, already reeling from record high unemployment, has warned that further closures due to the regulations could threaten reliability in both the Upper and Lower Peninsulas. The situation is even worse in Ohio, which is now facing 6 GW of closures, the most in the entire country.[vii]

Updated List of Power Plants Set to Close According to EPA’s Modeling and Public Disclosures

The following is a list of all of the power plants that are set to close according to EPA’s modeling combined with public disclosures. A complete explanation of the methodology we used to compile this list is in the Appendix.

EPA Regulations are Already Causing Electricity Prices to Dramatically Rise

Pricing trends in the PJM Interconnection are showing troubling signs concerning the impact on electricity rates of power-plant retirements due EPA regulations.  EPA has called PJM Interconnection’s operating region “one of the largest and most heavily dependent on coal-fuel generation in the country.”  Much of this coal generation is in an area PJM calls the “RTO,” which encompasses states like Ohio, Indiana and Illinois.  Last May, PJM Interconnection held its Future Capacity Auction for 2014/2015, the first to incorporate Utility MACT requirements.  During that Auction, future capacity prices in the RTO increased by an incredible 350 percent.  PJM concluded the vast majority of this increase was due to requirements “to meet increasingly stringent environmental regulations.”  According to the Chicago Tribune, these price increases will cause Chicago-area electricity bills to go up $107 to $178 per year and raise annual costs for Chicago Public Schools by $2.7 million, $3.3 million for the Metropolitan Water District, and $5.4 million for Chicago’s city government.

Northern Ohio Expected to See Disproportionally High Electricity Prices

Financial analysts now expect prices to increase even higher in northern Ohio due to recent power-plant closures caused by Utility MACT.  UBS projects future capacity prices in this May’s Future Capacity Auction for 2015/2016 will increase at least 60 percent in northern Ohio.  According to UBS, this increase is due to significant transmission congestion caused by recently announced Utility MACT-related power-plant closures.  Deutsch Bank has said that prices could increase by as much as 300 percent.  Ratepayers in northern Ohio are paying a high price for EPA’s regulatory agenda.

[i] Environmental Protection Agency, Regulatory Impact Analysis of the Proposed Toxics Rule, Mar. 2011, http://www.epa.gov/ttn/atw/utility/ria_toxics_rule.pdf

[ii] Environmental Protection Agency, Regulatory Impact Analysis (RIA) for the final Transport Rule, http://www.epa.gov/airtransport/pdfs/FinalRIA.pdf

[iii] Institute for Energy Research, IER Identifies Coal Fired Power Plants Likely to Close as Result of EPA Regulations, Oct. 7, 2011, http://www.instituteforenergyresearch.org/2011/10/07/ier-identifies-coal-fired-power-plants-likely-to-close-as-result-of-epa-regulations/.

[iv] David Shaffer, Xcel’s power pullback, Star Tribune, Dec. 1. 2011, http://www.startribune.com/business/134825258.html.

[v] See North American Electric Reliability Corp, 2011 Long-Term Reliability Assessment, Nov. 2011, http://www.nerc.com/files/2011LTRA_Final.pdf.

[vi] Cassandra Sweet, Michigan Utility to Scrap ‘Clean-Coal’ Plant, Shut Older Coal Unit, Wall Street Journal, http://online.wsj.com/article/BT-CO-20111202-713204.html

[vii] See e.g. FirstEnergy, FirstEnergy, Citing Impact of Environmental Regulations, Will Retire Six Coal-Fired Power Plants (Press Release), Jan. 26, 2012, http://www.prnewswire.com/news-releases/firstenergy-citing-impact-of-environmental-regulations-will-retire-six-coal-fired-power-plants-138115263.html; Dow Jones Newswires, Midewest Generation, GenOn Energy Announce Power Plant Closings—WP, Feb. 29, 2012, http://www.foxbusiness.com/news/2012/02/29/midwest-generation-genon-energy-announce-power-plant-closings-wp/.

Filed Under: News, Products and Power Tagged With:

National Academy of Sciences: Renewable Fuel Standard Goals Unlikely To Be Met

April 27, 2012 by Leave a Comment

 

The National Academy of Sciences (NAS) released a report in 2011 on the feasibility of meeting the Renewable Fuel Standard (RFS) passed during the Bush administration. To no one’s surprise, the NAS found that the United States could not meet the mandated 2022 biofuels targets for cellulosic ethanol without unexpected technological breakthroughs. The Energy Information Administration (EIA) has been forecasting that result since the passage of the Energy Independence and Security Act of 2007[i] that mandated the biofuels production levels.[ii] The report also concludes that the RFS “may be an ineffective policy for reducing global greenhouse gas emissions,” since the full life cycle of the fuel, including its transport, could result in higher emissions than conventional petroleum.

The Energy Independence and Security Act

In 2005, during the Bush administration, Congress passed the Renewable Fuel Standard (RFS) as part of the 2005 Energy Policy Act. In 2007, the RFS was amended in the Energy Independence and Security Act. To evaluate these policies, Congress asked the National Academy of Sciences to evaluate the Renewable Fuel Standard (RFS) goals,[iii] the potential environmental benefits and harm from biofuels production, and barriers to achieving the RFS mandate.

The Energy Independence and Security Act mandates 36 billion gallons of biofuels to be produced by 2022, of which 21 billion gallons must come from advanced biofuels by 2022 and the remainder, 15 billion gallons, from corn-based ethanol. Of the 21 billion gallons of advanced biofuels, 16 billion gallons must come from cellulosic biofuel by 2022 and 1 billion gallons must come from biomass-based diesel by 2012.[iv] Because cellulosic biofuel is not yet commercially viable, the Environmental Protection Agency (EPA) “is required to set the cellulosic biofuel standard each year based on the volume projected to be available during the following year.” In 2011, the EPA reduced the mandated level of 250 million gallons of cellulosic biofuel to 6.6 million gallons. EPA’s proposed 2012 standard sets the cellulosic ethanol level at 3.45 to 12.9 million gallons[v], well below the 500 million gallons mandated in the 2007 law.

The NAS Study

The National Academy of Sciences study was authored by a commission of researchers in transportation, economics and environmental studies and is not connected with the government. It is an independent group of specialists and experts that Congress can consult for expertise on issues.[vi] They were tasked to

  • Describe the biofuels that were produced in 2010 and expected to be produced and consumed in 2022.
  • Discuss the environmental harm and benefits of biofuels production and the barriers to achieving the mandates.
  • Review estimates of achieving the mandates on the prices on land, food, feed, and forest products; imports and exports of relevant commodities, and federal revenue and spending.

Their major findings are:

  • Without major technological breakthroughs, the cellulosic biofuel mandate of 16 billion gallons in 2022 is unlikely to be met because no commercially viable bio-refineries exist for converting cellulosic biomass to fuels. The 2022 mandate for corn-based ethanol of 15 billion gallons is achievable since the United States had the capacity to produce 14.1 billion gallons from corn grain at the end of 2010. And, the mandate for biodiesel of 1 billion gallons is also achievable since the United States had the capacity to produce 2.7 billion gallons of biodiesel from vegetable oils and animal fats at the end of 2010. In 2010, 13.2 billion gallons of corn-based ethanol and 311 million gallons of biodiesel were produced.
  • The RFS may be an ineffective policy for reducing greenhouse gas emissions because the impact of biofuel production on those emissions depends on a wide range of land-use and other management factors. The production of biofuels could result in an increase in greenhouse gas emissions compared to conventional petroleum because manufacturing and transporting the biofuel burns additional fossil fuels. Displacing current crops with biofuel crops could result in other land being converted for farming that carries with it a large one-time greenhouse gas emission increase. Depending on how feedstocks are planted, they can have a negative or positive environment on water quality, soil and biodiversity. And, the use of fertilizers and certain water treatments to grow the feedstocks could harm the local ecosystem.[vii]
  • Biofuels would only be cost effective with conventional petroleum in an environment of high oil prices, high carbon prices, technological breakthroughs, or a combination thereof. The study found that they would become economic if oil prices hit $191 per barrel in 2022 (2008 dollars), which is EIA’s high oil price case[1]; a carbon price of $118 to $138 per tonne of carbon dioxide equivalent with an oil price of $111 per barrel, EIA’s reference case oil price; or if government subsidies are high enough. The current subsidy of $1.01 per gallon of cellulosic biofuel blended with fossil fuels is insufficient at the $111 per barrel oil price to make them economic.
  • Because additional land (30 to 60 million acres) would be required for cellulosic feedstock production, the mandates are expected to increase competition between land uses and increase land prices and the cost of feed.
  • The mandate would increase federal budget outlays due to increased spending on payments, grant, loans, and loan guarantees and foregone revenue from biofuel tax credits, which currently end in 2012 but have historically been renewed. Federal programs that could be affected by increased spending are Agricultural Commodity Payments; Conservation Reserve Program; Nutritional and Other Income Assistance Program; and Grants, Loans, and Loan Guarantees.
  • The major barriers to cellulosic biofuel production are the high cost of production and the uncertainty regarding future markets. For example, bio-refineries are only willing to pay  $25 for a ton of corn byproducts used in cellulosic ethanol production, but suppliers (farmers) say they need $92 to break even assuming a world oil price of $111 per barrel and no policy incentives. Likewise, there is a $106-per-ton price gap for switchgrass produced in the Midwest.[viii] Further, if the biofuel is ethanol, infrastructure and blending issues need to be resolved. Currently, gasoline can be a blend of 90 percent petroleum and 10 percent ethanol that would amount to an ethanol demand of about 14 billion gallons, lower than the mandate in 2022. Thus, either the blending level would need to be raised or flex fuel vehicles would need to make a major headway into U.S. auto market sales, raising infrastructure issues for sale of E85, a blend of 85 percent ethanol and 15 percent petroleum. Earlier this year, the EPA upped the blending share for ethanol in gasoline to 15 percent for vehicles of model year 2001 or newer, but the agency is facing law suits that claim it violated the Clean Air Act by approving E15 for use in some vehicles, but not in others.[ix]

The Cost of Producing Biodiesel

Neste oil, the world’s largest renewable diesel firm just upped its production costs for producing biodiesel from feedstocks consisting of oils, greases, and fats. Production costs, excluding feedstock costs, increased 25 percent from its 2009 level.[x] The increased production cost is primarily due to elevated utility costs and the increasing price of hydrogen, which are unlikely to decline. The communications manager of sustainability, oil products and renewables at Neste Oil stated:

“The production costs of our conventional fossil diesel are significantly lower than those of renewable NExBTL diesel. Petro-diesel is a “bulk product” produced at large refineries. NExBTL, on the other hand, is a small-volume specialty product when compared to fossil diesel. This is naturally reflected in the higher cost per unit.”

Obama Administration Investment in Biofuels

The Obama administration is spending up to $510 million in advanced biofuels over the next 3 years to fuel military and commercial ships and jets. Under the agreement, the Department of Energy, the Department of Agriculture and the U.S. Navy will each contribute $170 million to the program, which is to be matched by industry.  The Navy sees this investment as part of the way to meet its portion of the administration’s goal of cutting the federal government’s dependence on fossil fuels by 50 percent by 2020, and it is expected to contribute to President Obama’s goal of cutting foreign oil imports by one-third by 2025.[xi]

Conclusion

Clearly, cellulosic ethanol is not ready for prime time, nor will it be by 2022 without an unexpected major breakthrough, according to the NAS report. Wallace Tyner, co-chair of the NAS panel, a professor of agricultural economics at Purdue University and co-director of the Center for Research on Energy Systems and Policy sums up the study as follows: “Whereas the technology and costs of making ethanol fuel from corn are well known, cellulosic on the other hand is new technology. We don’t know how it works. We don’t know how much it will cost. There are no plants in operation. Here we are in 2011 at 0 gallons and we have to get to 16 billion gallons by 2022.  That’s double or triple how fast ethanol fuel became commercially viable. Everybody in the industry wants to build the fourth or fifth plant. Nobody wants to build the first.”[xii]

Lately, much has been made with the Solyndra bankruptcy. Some people claim that it was an isolated incident, but that is incorrect. Solyndra was a product of policymakers thinking they were smarter than the market. They argued that Solyndra could “work” if the government would provide loan guarantees. With cellulosic ethanol, the Bush administration argued that a guaranteed market through a renewable fuel standard would “work.” In both these cases and in many others, the loan guarantees, the mandates, and the subsidies did not work because the technology is just too expensive even with millions or even billions of dollars in special treatment.

So, it is unlikely that the cellulosic biofuel mandates in the Energy Independence and Security Act will be met. Hopefully, the Administration and Congress will use this as a lesson for the future and not mandate production levels or provide loan guarantees for technologies not commercially viable.

 

[1] The breakeven price was not calculated, but would be between EIA’s reference oil price and high oil price, i.e. between $111 and $191 per barrel (2008 dollars).

[i] http://energy.senate.gov/public/_files/getdoc1.pdf

[ii] See Energy Information Administration, Annual Energy Outlook 2011 and preceding editions,http://www.eia.gov/forecasts/aeo/

[iii] National Academy of Sciences, Renewable Fuel Standard Potential Economic and Environmental Effects of U.S. Biofuel Policy, October 2011, http://www.nap.edu/openbook.php?record_id=13105&page=R1

[iv] http://energy.senate.gov/public/_files/getdoc1.pdf

[v] The Hill, Next-wave ethanol falls short in EPA’s new 2012 fuel standards, June 21, 2011, http://thehill.com/blogs/e2-wire/677-e2-wire/167651-next-wave-ethanol-falls-short-as-epa-sets-2012-fuel-standard

[vi] USA Today, Ethanol fuel use goal likely a bust, science panel says, October 4, 2011,http://content.usatoday.com/communities/driveon/post/2011/10/report-biofuels-loing-failure-more-greenhouse-gas-unprofitable-subsidy-oil-cellulosic-ethanol-/1

[vii] EE News, BIOFUELS: Study raises questions about RFS impacts, goals, October 4, 2011, http://www.eenews.net/Greenwire/2011/10/04/3

[viii] EE News, BIOFUELS: Study raises questions about RFS impacts, goals, October 4, 2011,http://www.eenews.net/Greenwire/2011/10/04/3

[ix] Institute for Energy Research, March 28, 2011, http://www.instituteforenergyresearch.org/2011/03/28/epa-pushes-ethanol-on-american-consumers/

[x] Auto Blog Green, World’s largest renewable diesel refiner says cost of fuel is way more than anticipated, September 28, 2011, http://green.autoblog.com/2011/09/28/worlds-largest-renewable-diesel-refiner-says-cost-of-fuel-is-wa/

[xi] The Hill, Obama administration to invest $510M in biofuels industry to power ships, jets, August 16, 2011,http://thehill.com/blogs/e2-wire/677-e2-wire/177041-biofuel-grafs

[xii]USA Today, Ethanol fuel use goal likely a bust, science panel says, October 4, 2011,http://content.usatoday.com/communities/driveon/post/2011/10/report-biofuels-loing-failure-more-greenhouse-gas-unprofitable-subsidy-oil-cellulosic-ethanol-/1

 

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

New EPA GHG Rule is Latest Assault on American Energy

April 26, 2012 by Leave a Comment

“The Obama agenda seeks to control the way we live, work, and act by controlling the sources of energy we use. This rule gives more power to Obama regulators by giving fewer sources of affordable energy to American consumers.”
– IER President Thomas J. Pyle

WASHINGTON D.C. — The U.S. Environmental Protection Agency is preparing today to issue a proposed rule for greenhouse gas emissions from new power plants, a move that industry experts believe “effectively bans new coal plants” in the United States. Currently, coal-fired energy provides nearly 45 percent of America’s electricity needs, while solar and wind energy provide a combined 2.33 percent.

IER President Thomas Pyle released the following statement in advance of EPA’s proposed rule:

“President Obama promised to bankrupt coal-powered electricity in the United States, and this latest rule — when combined with the administration’s new rules for mercury emissions and cross-state pollution — makes good on that promise. Already, towns like Craig, Colo., whose economies rely on coal-fired electricity generation, are struggling under the burden of Obama regulations.

“Because the administration couldn’t shut down towns like Craig through cap-and-trade laws, the President has determined to impose his agenda through the EPA. This development is not surprising, given the president’s assurance that cap-and-trade was ‘just one way of skinning the cat.’

“The United States has the largest coal reserves of any country in the world with 486 billion short tons of technically recoverable resources. States like Wyoming, West Virginia, Kentucky, Pennsylvania, and Montana lead the nation in producing this valuable resource for affordable electricity. If the EPA’s new rules are finalized, entire industries across the United States will be pushed out of business — and jobs with them.

“The EPA’s increasingly politicized rule making is clear. Administrator Lisa Jackson and her regulatory enforcers are advancing an agenda that gives tremendous financial benefit and market advantage to the president’s closest allies in the renewable sector and satisfies the ideological demands of environmental extremists who want to destroy traditional energy in America.

“The Obama agenda seeks to control the way we live, work, and act by controlling the sources of energy we use. This rule gives more power to Obama regulators by giving fewer sources of affordable energy to American consumers.”

Filed Under: News, Products and Power Tagged With:

Death and Toxins: How Krugman Botched His Mercury Commentary

April 25, 2012 by 1 Comment

 

Critics of NYT columnist and blogger Paul Krugman know that the economist—who won his Nobel award for work on international trade—has a habit of carelessly repeating the “facts” on environmental issues put out by his liberal colleagues. Yet Krugman’s blog post on the EPA’s decision to regulate mercury emissions from power plants was so factually mistaken and incredibly misleading that it was surprising even by his standards. In this post I’ll clarify the depth of the chasm between Krugman’s comments and reality.

Krugman on Mercury Regulation

Here is how Krugman used his extraordinary megaphone at the NYT blog to deal with the EPA’s decision. Krugman first quotes two paragraphs from Grist writer David Roberts, then returns to his own (Krugman’s) commentary:

David Roberts reports on the EPA’s decision, finally, to regulate mercury from coal plants:

Anyone who pays attention to green news will have spent the last two years hearing a torrent of stories about EPA rules and the political fights over them. It can get tedious. After a certain point even my eyes glaze over, and I’m paid to follow this stuff.

But this one is a Big Deal. It’s worth lifting our heads out of the news cycle and taking a moment to appreciate that history is being made. Finally controlling mercury and toxics will be an advance on par with getting lead out of gasoline. It will save…tens of thousands of lives every year and prevent birth defects, learning disabilities, and respiratory diseases. It will make America a more decent, just, and humane place to live.

[Back to Krugman writing:] Let me repeat part of that: it will save tens of thousands of lives every year and prevent birth defects, learning disabilities, and respiratory diseases. This is actually a much bigger issue, when it comes to saving American lives, than terrorism.

As Roberts explains, we’ve known about these costs of mercury pollution for decades, yet it took until now to get something done. The reason is, of course, obvious: special interests, hiding behind claims of immense economic damage if anything was done, were able to block action. [Emphasis in original.]

This is Krugman’s preferred M.O. when it comes to environmental issues: Copy-and-paste wild numerical claims, no matter how implausible on their face, and then pretend that all of the scientists agree with Krugman, while anyone who objects is either a fool or a paid shill of big business.

In this case, the numbers were so absurd that I decided to spend a few hours digging into the matter more deeply. Even those who are familiar with the progressive Left’s willingness to bend numbers to support their ideological causes may be surprised at what I uncovered.

The Origins of a Bogus Statistic: The Liberal Blogosphere Telephone Game

Most readers are probably familiar with the “telephone game,” in which one person whispers a statement to a second person, who whispers it to a third, and so on. With a big enough group, by the time the “statement” reaches the last person, it has morphed into something only faintly resembling the original utterance.

Something analogous partially explains what happened with Krugman’s over-the-top analysis. Glancing up again at the Krugman quotation, notice that the good doctor—in a post titled, “The Meaning of Mercury”—cited the claim that the EPA’s decision will “save tens of thousands of lives every year,” and then Krugman wrote, “[W]e’ve known about these costs of mercury pollution for decades.”

Because of Krugman’s title and discussion, the innocent reader would be led to believe that “the science” had shown that mercury pollution itself was responsible for at least 20,000 deaths annually, in the same way that (say) car crashes are responsible for a large number of deaths every year.

This is why my alarm bells went off. After all, in 2007 (the latest year of finalized data) the U.S. only had 2.4 million deaths total, with much of this number due to causes clearly unrelated to mercury. (For example, more than 123,000 died from accidents, some 35,000 were suicides, and 18,000 were homicides.) Was Krugman really telling us with a straight face that he thought at least 20,000—the lowest number that would render “tens of thousands” an accurate description—deaths were due to mercury emissions from coal-fired power plants?

We can see how Krugman’s version of reality starts to unravel, just by looking more closely at the very quote Krugman himself selected from David Roberts, who had written: “Finally controlling mercury and toxics will be an advance on par with getting lead out of gasoline” (italics added). Krugman, whether intentionally or through ignorance, led his readers to believe that this was a discussion about mercury, when, as we will see, the (bogus) statistic isn’t based on mercury emissions at all.

“Saving Lives” versus “Preventing Premature Deaths”

If we follow Krugman’s link to David Roberts’ piece, we don’t see any specific explanation of the “tens of thousands of lives” claim. However, in that piece Roberts’ links to this guest post at ClimateProgress (Joe Romm’s blog), by Daniel J. Weiss and Jackie Weidman. It is here that we start learning where the “tens of thousands of lives” number comes from, because the authors write, “These rules will remove millions of pounds of mercury, lead, arsenic and other dangerous pollutants from coal plants, preventing 17,000 premature deaths annually.”

Notice that the telephone game has struck again. Weiss and Weidman say the rules will prevent “17,000 premature deaths annually.” David Roberts incorrectly translated that into a claim that the rules will “save tens of thousands of lives.”[1] Besides being wrong numerically, it’s also misleading, since preventing a “premature death” doesn’t have quite the same ring as “saving lives.”

If a new air traffic control system reduces airplane crashes, so that fewer people die from “airplane crash” every year, then it is clearly saving lives, and the evidence for the efficacy of the new system is quite objectively verifiable. But if instead someone claims that a new pill will reduce “premature deaths” by a certain number each year, that is a much more abstract claim, dependent on a theoretical model. The new pill might in fact be a wonderful boon to public health, but the researchers in question have a lot more leeway to come up with a wildly wrong number when they can play with “preventing premature deaths.”

Reporting the Top of the Range Instead of the Range

Alas, even the “prevent 17,000 premature deaths” claim has fallen victim to the telephone game. If we follow the link that Weiss and Weidman provide, we are led to the EPA analysis fueling much of the progressive blogosphere’s commentary on the issue. Here we see, at long last, the origin of the factoid. On page 3 the report explains, “In 2016, these proposed rules would avoid: 6,800 – 17,000 premature deaths.” Thus, when Weiss and Weidman confidently asserted that the rules would “prevent…17,000 deaths annually,” they were reporting the very highest number in a range given by the EPA. (Note also that the low end of the range wouldn’t even constitute ten thousand, let alone “tens of thousands.”)

Bait and Switch: None of This Is About “Air Toxics” After All

We have already seen the telephone game’s ability to distort and inflate, resulting in Paul Krugman’s absurd implication that the scientific consensus has known for decades that mercury emissions from power plants currently cause at least 20,000 deaths annually, and that anyone who disagrees must be stupid or corrupt.

However, a reasonable person might respond, “Okay Murphy sure, the figures weren’t just about mercury, but ‘mercury and other air toxics.’ It’s also true Murphy that the actual number might be as low as 6,800 premature deaths avoided, rather than ‘tens of thousands of lives saved.’ But still, Krugman and his allies are only guilty of inflating the numbers and botching the summary of the facts. The basic spirit of their analysis is still sound, right?”

Unfortunately, what is happening here is far more Orwellian than a mere telephone game. The EPA’s analysis is based on a gigantic bait-and-switch, as Dr. Anne E. Smith explained in her August, 2011 technical commentary on the EPA’s proposed rule. From Smith’s summary of her findings:

EPA reports that the Proposed Rule will produce annual benefits of 6,800 to 17,000 avoided premature deaths and other types of health effects reductions, with an estimated value ranging from $53 billion to $140 billion, but these benefits have nothing to do with air toxics at all. The fact that none of these benefits are due to air toxics reductions is quite clear if one reads the Executive Summary (Chapter 1) of the RIA. [Emphasis in original.]

Indeed, if one knows what to look for, this shocking revelation is implicit in the EPA’s own fact sheet (which the ClimateProgress writers Weiss and Weidman linked to). On the very same page that provides the “6,800 – 17,000 premature deaths” bullet point, the EPA document says:

The updated standards will provide certainty and level the playing field so that all power plants will have to limit their toxic emissions – ultimately preventing 91 percent of the mercury in burned coal from being emitted into the air. The rule provides up to 4 years for facilities to meet the standards.

EPA did not estimate the benefits associated with reducing exposure to air toxics or other air pollutants, ecosystem effects, or visibility impairment. However, the proposed toxics rule would cut emissions of pollutants that are of particular concern for children. Mercury and lead can adversely affect developing brains – including effects on IQ, learning, and memory.

In addition to the benefits of reducing exposure to air toxics, these standards would reduce concentrations of fine particles (PM2.5) in our air. This will significantly improve public health by preventing hundreds of thousands of illnesses and thousands of premature deaths each year. [Emphasis added.]

Thus we see that the figures (both for premature deaths and economic benefits) cited by the progressive bloggers refernot to emissions of mercury by itself or even of mercury plus all other “air toxics” combined, but rather to a certain type of fine “particulate matter,” denoted PM2.5. In other words, EPA proposed a rule to limit mercury and other “air toxics” emissions and then, to justify the rule, almost completely relied on a model of the costs and benefits of reducing PM2.5emissions, which would be an incidental byproduct of the rule. Thus, even if we accept the EPA’s analysis as gospel truth,the numbers of “lives saved” cited by Krugman have virtually nothing to do with mercury at all.

But wait, it gets worse. As Dr. Smith explains later (pp. 6-7) in her analysis, the modeling assumptions behind these PM2.5 numbers are themselves quite dubious:

[R]eaders unfamiliar with the literature on PM2.5 health risks should be aware that the estimates of PM2.5-attributed deaths (such as the 6,800 to 17,000 that EPA is attributing to the Proposed Rule) are based entirely on statistical associations between total mortality rates in various locations of the US and their respective monitored, region-wide ambient PM2.5 concentrations….EPA’s estimate of 6,800 to 17,000 PM2.5-related premature deaths avoided in 2016 as a result of the Proposed Rule is based on an assumption that 130,000 to 320,000 deaths, respectively, of 2005’s US deaths were hastened by breathing ambient PM2.5….And yet, EPA identifies not a single death during 2005 that was attributed, even in part, to exposure to ambient PM2.5. If PM2.5 is indeed having this estimated effect on the public health, there is no evidence indicating when or where these events occurred, or who was affected. Rather, these mortality estimates are merely inferences drawn after making a host of assumptions about how to convert a statistical association into a concentration-response function. No one really even knows what types of deaths might be implicated. A common belief among researchers is that the deaths are primarily cardiovascular in nature, but this is far from an established fact: everything from cardiovascular causes to diabetes to lung cancer has been mentioned as having such an association in one paper or another. There is no clinical evidence to inform these inferences either, despite at least 15 years of efforts by researchers to find a clear physiological mechanism to explain and lend credibility to these estimates based solely on statistical correlations.

Conclusion

The deeper one digs into the actual science backing up the wild claims of Krugman & Co. on mercury regulation, the weaker their rhetoric becomes. The implausible assertions in Krugman’s blog post were generated by a comedy of transgressions, ranging from (perhaps honest) poor paraphrasing, to reporting the top number of a wide range, to justifying regulations on air toxics emissions based on dubious models of the health effects of particulate matter.

In conclusion, let me be clear: No one is claiming that little kids should play with mercury. (In fact, will Krugman, David Roberts, et al. join IER in opposing the government’s phased-in ban on incandescent bulbs that will effectively force all schools and daycare centers—not to mention homes—to use mercury-filled CFLs? These guys keep telling us how dangerous mercury is, after all.) Yet the public should get mighty suspicious when the allegedly airtight evidence on the benefits of mercury regulation turns out to be so very fragile indeed.

[1] Maybe Roberts is adding EPA’s claim of avoiding 17,000 premature deaths to other numbers, but if so, he fails to note his source.

Filed Under: Facts, News, Products and Power Tagged With: , , , ,

ICYMI: AEA Fires Energy ‘Jump Ball’ for 2012 President Election

April 25, 2012 by Leave a Comment

The Washington Post
By Dan Eggen
April 25, 9:28 AM

Nearly all of the independent advertising aired for the 2012 general-election campaign has come from interest groups that do not disclose their donors, suggesting that much of the political spending over the next six months will come from sources invisible to the public.

Politically active nonprofits that do not reveal their funding have spent $28.5 million on advertising related to the November presidential matchup, or about 90 percent of the total through Sunday, a Washington Post analysis shows.

Most of the ad spending has come from conservative groups criticizing the policies of President Obama in key swing states, the data show. Tens of millions more have been spent by secretive groups targeting congressional races, again primarily in support of Republicans.

The numbers signal a shift away from super PACs, which are required to disclose their donors to the Federal Election Commission and which have dominated political spending in the Republican presidential primary contest. Instead, the battle between Obama and presumptive GOP nominee Mitt Romney appears likely to be dominated by a shadow campaign run by big-spending nonprofits that do not have to identify their financial backers.

The pattern underscores the growing influence of corporations and wealthy individuals in the wake of a Supreme Court decision that made it easier to spend unlimited money on elections. The numbers also suggest that many wealthy donors are increasingly opting for the confidentiality of nonprofits rather than allowing the public scrutiny that comes from giving to super PACs or candidates.

“I think there is a potential to see a tremendous amount of money flowing through these nonprofit groups,” said Bill Allison, editorial director at the Sunlight Foundation, which advocates greater disclosure for political organizations and candidates. “For an awful lot of donors, it’s a very attractive way to give without leaving any kind of footprint.”

Crossroads GPS, the largest of the independent pro-Republican groups, said it raised nearly $40 million from unidentified donors in the first three months of this year, compared with less than $10 million by its affiliated super PAC, American Crossroads, which discloses contributions, according to documents and officials.

The Crossroads groups have run nearly $12 million in anti-Obama ads this cycle, nearly all of them paid for by the secretive nonprofit arm, according to data from Kantar Media/Campaign Media Analysis Group, which tracks ad spending. Recent tax records showed that 90 percent of the $76 million raised by the nonprofit arm through 2011 came from unidentified donors who gave $1 million or more, including two who gave $10 million each.

Many of the spots aired by groups such as Crossroads GPS are considered “issue ads” because they do not specifically urge viewers to vote for a particular candidate. The strategy allows them to conform to Internal Revenue Service rules for “social welfare” groups, which do not have to disclose their donors as long as their “primary purpose” is not politics.

One Crossroads GPS spot currently running in Virginia, for example, castigates the president for high energy costs. “No matter how Obama spins it, gas costs too much,” the female narrator says. “Tell Obama: Stop blaming others and work to pass better energy policies.”

Despite its anti-Obama message, the ad is not considered an election-related message under FEC and IRS guidelines. That means the money spent to air the spot — about $204,000 in the Richmond, Charlottesville and Washington markets — will not count as part of the group’s political budget, experts say.

“We are still very early in the cycle, with virtually all of last year and the first quarter dedicated to framing legislative and regulatory issues with conservative messaging,” said Jonathan Collegio, a spokesman for the Crossroads groups. “As we approach the elections, more of our expenditures will be political and election focused.”

In addition to Crossroads, top expenditures on anti-Obama issue ads include $7 million from Americans for Prosperity, a conservative group with ties to oil billionaires Charles and David Koch; $3 million from the American Future Fund, a nonprofit conservative group based in Iowa; and at least $3.3 million from the American Energy Alliance, a group supported in part by the energy industry.

Liberal groups have spent little in comparison. The Environmental Defense Fund and the American Federation of State, County and Municipal Employees have each spent about $1.1 million on ads related to the general presidential election, the data show. Most of the money on the left, particularly from labor unions, is expected to be spent on grass-roots organizing rather than advertising.

Benjamin Cole, communications director for American Energy Alliance, said the estimated $4 million the group has spent on television, radio and Internet ads “is just a fraction of what we’re expecting to spend” by November. He said the group is proud that it “fired the jump ball for the general election” with an ad running in 10 swing states that criticizes Obama’s energy policies and warns of $9-a-gallon gasoline.

“Almost overnight it became Barack Obama and Mitt Romney on energy,” Cole said. “There’s no problem with that. We want the conversation about energy and we’re happy to keep that conversation going.”

Nonetheless, Cole said, the group’s aims are primarily educational and nonpartisan. He noted that the group has criticized Romney, giving him its “Dim Bulb Award” last week for saying in 2003 that coal energy “kills people.”

Watchdog groups have long complained about a lack of disclosure by tax-exempt advocacy organizations, and Democrats have pushed for stronger requirements. Last month, a federal judge in Washington ordered the FEC to require tougher disclosure rules for nonprofits that run ads within 60 days of an election, but it’s unclear whether the agency will act on the matter before November.

Much of the advocacy spending related to the presidential election will go undocumented until 2013, when interest groups file their annual reports with the IRS.

Super PACs also have come under fire for transparency because many donations to the groups are from entities that are hard to trace. Restore Our Future, a pro-Romney super PAC that has raised $52 million, said it would revise its FEC disclosures this week after news organizations raised questions about a $400,000 donation linked to a defunct company address.

Spokeswoman Brittany Gross said the listing was the result of a “clerical error.” She said the filing will be updated to show a pair of $200,000 contributions from Gerald and Darlene Jordan, who hosted a recent fundraiser for Romney at their home in Palm Beach, Fla.

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Filed Under: News Tagged With: , , , ,

Ending Corn Ethanol Support

April 23, 2012 by 14 Comments

 

A USAToday story on the expiration of federal government support of domestic corn ethanol demonstrates the media’s ability to shape a story while appearing to be objective. The reporter technically includes both sides of the story, but trumpets one side so that the average reader would be outraged at the policy change. In reality, federal government support for ethanol is an inefficient attempt at central planning of markets that spawned some terrible consequences.

What’s In a Headline?

Right from the start, we know where the story is coming from. Its headline blares: “End of ethanol subsidy will raise the price of gas.”

Yet this is just one of the points addressed in the article. For example, after reading the text of the piece the editor could have used any of the following alternative headlines:

1) “End of ethanol subsidy will allow Congress to give Americans huge tax cut.”

2) “End of ethanol subsidy will trim deficit by $60 billion over 10 years.”

3) “End of ethanol subsidy will lower food prices.”

4) “End of ethanol subsidy means Congress no longer picking winners and losers in energy markets.”

5) “End of ethanol subsidy without repeal of ethanol mandate means government makes consumers pay more for gasoline.”

Each of these five alternate headlines would be just as true as the one the editor went with. They have a different ring from talking about raising gas prices, don’t they?

As the article explains, the subsidy was a 45-cent-per-gallon tax credit given to refiners for blending ethanol into gasoline, which works out to 4.5 cents a gallon for “E-10.” The tax credit did two things: (1) It made it cheaper to produce ethanol thus increasing its supply and pushing down its price. (2) It increased the demand for ethanol and hence for corn, thus pushing up the price of all types of food. Furthermore, the tax credit meant the Treasury received $6 billion less than it otherwise would have.

With this context, now we can see how removing the 45-cent-per-gallon subsidy would yield the various effects described in the hypothetical headlines above.

This Was Never About Encouraging Ethanol Use

The irony in the ethanol program was that it has never been about the environment, or weaning Americans off of their “dependence” on oil, as supporters of the program claimed. Instead, the rationale for the tax credit—and the mandate that we put it in our gasoline — and the reason the program lasted for 30 years—was to provide a quite naked payoff to American corn growers.

This is obvious when we consider the other component of the program: A 54-cent-per-gallon tariff on imported ethanol. The tariff made Brazilian ethanol (produced from sugar cane) unable to compete in the United States with corn-based ethanol. This ensured that the generous tax credit given to refiners ended up boosting incomes of American farmers, rather than Brazilians.

Let the Market Decide

Federal ethanol policies have been a classic case of the far reaching consequences of federal policies. In recent years, with more and more of the corn crop getting diverted by federal mandate to ethanol, we have seen spiking commodity prices and global food riots, even ardent boosters of ethanol started having doubts.

The economist Ludwig von Mises demonstrated that once the government begins dabbling in one sector of the market, it leads to problems that invite yet more intervention. The government swells, with more money and more regulations being thrown as the problem evolves.

In this case, the government initially wanted to support domestic farmers while boosting the use of ethanol. To that end, it implemented a tax credit to refiners who were forced by law to incorporate ethanol. However, if that were the end of things, then the Treasury would effectively be creating a tax loophole to funnel money to Brazilian farmers, since they could produce ethanol more cheaply. Thus the need to implement the tariff, keeping Brazilian ethanol out.

Yet the extra demand for corn caused its price to rise, but also the prices of everything for which corn is used, including cattle feed (and hence beef prices), and chicken feed (and hence chicken prices). Moreover, by raising the price of corn, the ethanol support caused farmers to use more of their land growing corn, rather than other crops. The reduced supply made these agricultural products more expensive, too.

The government lacks the knowledge and judgment to decide whether refiners should be using more ethanol, or whether such ethanol should be produced domestically versus abroad. These are the types of decisions that a decentralized market makes, day in and day out. Central planning doesn’t work in North Korea, and it doesn’t work in US energy markets either.

Conclusion

Eliminating the tariff on imported ethanol removes an artificial barrier to the free movement of goods across borders, and hence can increase the standard of living of Americans and Brazilians. The elimination of the special tax credit for ethanol moves the tax code in the direction of simplicity and neutrality with respect to various energy sources. To prevent the change from being a net tax hike, the government could reduce tax rates across the board for all Americans. Lastly, the next thing to be repealed should be the ethanol mandate, which compels the use of one product and drives up gas prices. If the USAToday staff is concerned about rising gasoline prices, they should support IER’s calls for increased access to domestic oil resources.

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

AEA launches “Obama Promises” ad on Pandora Radio

April 16, 2012 by Leave a Comment

WASHINGTON D.C. — The American Energy Alliance launched today a 30-second advertisement on Pandora Radio, a development of the Music Genome Project with more than 125 million registered users throughout the United States. The ad, entitled “Obama Promises,” will air in nine states — New Mexico, Colorado, Nevada, Iowa, Michigan, Ohio, Florida, Virginia and North Carolina.

AEA purchased 45 million spots for both audio and visual advertisements on Pandora Radio in what constitutes one of the largest current campaigns hosted by the Oakland, Calif-based company and a first-ever venture into Internet-based radio advertising by the Alliance. The spots will air between Apr. 16 and Apr. 27, 2012.

“The American Energy Alliance is adopting an ‘all of the above’ strategy to reach the American public with our message about President Obama’s failed energy policies. What began as a $3.6 million television ad now continues through an aggressive effort to reach tens of millions of Pandora listeners with a hard-hitting message about Obama gas prices and the politically-connected companies who benefit from the administration’s war on fossil fuels,” AEA President Thomas Pyle noted.

“We will use every available resource — from television to radio, the Internet to direct mail and grassroots mobilization — to educate American consumers who are paying for President Obama’s failures at the gas pump, on their electricity bills, and in the goods and services they use every day. The “Obama Promises” ad is latest component of our nationwide effort to combat bad policies that drive up the cost of energy and rob the American people of the affordable, organic energy sources our future depends on.”

To hear AEA’s “Obama promises” ad, click here.

To watch AEA’s “Nine Dollar Gas” ad, click here.

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Filed Under: Press Releases Tagged With: , , , ,

In the Pipeline: 4/11/12

April 11, 2012 by Leave a Comment

The Onion Couldn’t Have Written a Better Headline ABC News (4/10/12) reports: Former General Services Administration administrator Martha Johnson missed a lavish Las Vegas conference for government employees because she was already committed to meetings in California at  Solyndra, according to testimony in an official government investigation…Solyndra is the now-bankrupt green energy company that the Obama administration had provided with a $535 million loan through the stimulus…The development, if true, dovetails together two embarrassing but otherwise unrelated episodes for the Obama administration.

Gary Andres.  Michael Beckerman.  Alexa Marrero.  These people are without a doubt some of the best staff ever to serve at the House Energy and Commerce Committee.  Oh, and Chairman Upton has been better than pretty much any other chairman since the Republicans retook the majority The American (4/9/12) reports: U.S. energy policy needs a reboot—a broad reassessment of our strategies—because much of what we thought we knew has either dramatically changed or turned out to be plain wrong…When I first became involved in these issues, President Jimmy Carter told us our domestic energy supplies were running out and a foreign cartel would determine everything from the cars we drove to the temperatures in our homes. The future he painted looked bleak.

NYT is betting on the river card with this article — four paragraphs praising the virtues of affordable energy and then the party line New York Times (4/10/12) reports: Cheaper fuel produced domestically could reduce the cost of shipping and manufacturing, trim heating and cooling bills, improve the auto market and provide tens of thousands of new jobs…It might also pose new environmental challenges, both predictable and unforeseen, by damping enthusiasm for clean forms of energy and derailing efforts to wean the nation from its wasteful energy habits.

If people keep telling the truth, it will destroy the policy process as we know it Forbes (4/10/12) reports: High gasoline prices will fall once Americans start to conserve and they start to innovate. In the batter’s box: gas-to-liquids, or GTL, which can be used to power everything from buses to trucks to planes…Two key factors are at play. First oil prices are at $115 a barrel and second, natural gas is abundant and cheap at just more than $2 per million Btus. There’s a huge incentive to increase the value of that fuel given that the producers don’t want to get to stuck with undeveloped reserves.

You see, not every nation on the planet has gone insane Associated Press (4/10/12) reports: U.S. coal exports reached their highest level in two decades last year as strong demand from Asia and Europe offered an outlet for a fuel that is falling from favor at home…U.S. Department of Energy data analyzed by The Associated Press reveal that coal exports topped 107 million tons of fuel worth almost $16 billion in 2011. That’s the highest level since 1991, and more than double the export volume from 2006.

I wonder if Jim Hansen will shriek about how the NASA alums are trying to silence him Daily Caller (4/10/12) reports: Nearly 50 former NASA scientists, astronauts and technologists are chastising NASA for its position on man-made climate change…In a March 28 letter addressed to NASA Administrator Charles Bolden, the group of 49 former employees ask NASA and the Goddard Institute for Space Studies to “refrain from including unproven remarks in public releases and websites” because “it is clear that the science is NOT settled.”

Roger Pielke (both Junior and Senior) is pretty smart.  So when they say that the IPCC is intentionally misleading people about something, you should probably pay attention Roger Pielker (4/10/12) reports: As I prepared for my lunch seminar which I am giving later today. I had a chance to revisit the press release issued by the IPCC on January 25, 2010 in response to an article that appeared in the UK Sunday Times one day earlier which detailed failures of the IPCC AR4 related to claims made about climate change and disasters…The Sunday Times article was about how the 2007 IPCC AR4 mishandled the issue of the economic toll of disasters and climate change. With the advantage of hindsight, we can now see that the claims made in the Sunday Times article have been completely vindicated and the IPCC press release was full of misinformation (to put it kindly).  This post has the details.

Filed Under: Blog

In the Pipeline: 4/9/12

April 9, 2012 by Leave a Comment

First Energy would argue that they are not intentionally causing a shortage in the capacity markets in order to make a bunch of money from unsuspecting ratepayers.  I like to argue that I am taller and better looking than people think I am Platts Energy (4/8/12) reports: West Virginia regulators ordered FirstEnergy not to begin retiring three coal-fired plants in the state totaling 660 MW until regulators have a chance to review the company’s justification for the closings…The Public Service Commission said it has concerns about the retirements and it wants to evaluate the factors the company used to warrant their closings…The plants are the 292-MW Albright in Preston County, 242-MW Willow Island in Pleasants County and 126-MW Rivesville in Marion County. The plants will be closed by September 1, FirstEnergy said…Regulators asked FirstEnergy whether the retirements would produce upward pressure on capacity prices in the PJM Interconnection and the effect the closings would have on the net cost of service from an increase in capacity prices. It asked for a copy of PJM’s Reliability Status Report regarding how the closings would affect reliability.

This is not the April Fools’ Day version.  This is a legitimate, accurate story.  Which should make you a little queasy The Hill (4/6/12) reports: The Energy Department said Thursday it expects to begin tentatively approving new taxpayer-backed loans for renewable energy projects in the coming months…The announcement comes about seven months after Solyndra, the California solar firm that received a $535 million loan guarantee from the administration in 2009, went bankrupt, setting off a firestorm in Washington.

It is significantly less ridiculous than the Chevy Volt or the Nissan Leaf.  And taxpayers aren’t paying rich people to buy it Wall Street Journal (4/8/12) reports: The second day of media previews at the New York International Auto Show is traditionally quiet, with less pressure than opening day and far fewer important press conferences. Many reporters leave the show early on day two so they can catch flights home or get back to their offices…This year, though, many are likely to stick around at least until 1:35 p.m., which is when the press conference for flying-car maker Terrafugia Inc. is scheduled to begin. Indeed, the road-and airworthy vehicle on display, called the Transition, may attract as much attention from people from inside the auto industry as from those writing about it.

Thank goodness.  Matt Damon is finally here to help us work out national energy policy.  Words cannot express the relief of a grateful Nation Politico (4/8/12) reports: Matt Damon will star in “The Promised Land,” an anti-fracking movie set to begin filming later this month…WME Agency, which represents Damon, confirmed that the “Good Will Hunting” star has signed on to the movie and co-wrote the film, and that it is, indeed, about hydraulic fracturing — the controversial practice of pumping a mixture of sand, water and chemicals into a well to break up rock and help extract natural gas.

These are the endangered polar bears that poorly-informed but well-meaning people (kind of like Matt Damon) are always talking about.  Happily, they can now read this and learn something Globe and Mail (4/7/12) reports: The debate about climate change and its impact on polar bears has intensified with the release of a survey that shows the bear population in a key part of northern Canada is far larger than many scientists thought, and might be growing…The number of bears along the western shore of Hudson Bay, believed to be among the most threatened bear subpopulations, stands at 1,013 and could be even higher, according to the results of an aerial survey released Wednesday by the Government of Nunavut. That’s 66 per cent higher than estimates by other researchers who forecasted the numbers would fall to as low as 610 because of warming temperatures that melt ice faster and ruin bears’ ability to hunt. The Hudson Bay region, which straddles Nunavut and Manitoba, is critical because it’s considered a bellwether for how polar bears are doing elsewhere in the Arctic.

Filed Under: Blog
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