On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss recent movement on Capitol Hill and cover a litany of headlines from a busy week in the beltway and beyond.
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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.
On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss recent movement on Capitol Hill and cover a litany of headlines from a busy week in the beltway and beyond.
Links:
On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss recent primary contests, Biden’s latest stories, and the EPA’s “not-a-ban” ban on gas powered vehicles.
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The American Energy Alliance supports H.R. 1023 the Cutting Green Corruption and Taxes Act, H.R. 7023 the Creating Confidence in Clean Water Permitting Act, H. Res. 987 opposing the Biden Administration energy policies, and H. Con. Res. 86 a resolution opposing a carbon tax.
H.R. 1023 would repeal the so-called greenhouse gas reduction fund. This slush fund is a vehicle for handouts and payoffs to special interest groups that have the right politics. It is not an appropriate use of taxpayers dollars. The legislation would also repeal the natural gas tax which raises the cost of producing domestic natural gas. This tax comes out of the pocket of citizens in the form of higher prices for home heating and electricity, and these higher prices will continue to fuel inflation.
H.R. 7023 seeks to end the abuse of the Clean Water Act permitting process by codifying certain permitting standards. The CWA permitting process has become a main tool activists, anti-development groups and their political allies use to obstruct the construction of vital infrastructure. Codifying timelines and standards as this legislation does would limit this abuse and provide needed certainty for infrastructure development.
H. Res. 987 denounces the Biden administration’s anti-American energy policies. The administration has moved aggressively to suppress the production and sale of domestic energy resources. These actions fuel inflation by increasing energy prices, cost jobs in domestic energy production and harm our national security, making us reliant on foreign countries for vital energy resources.
H. Con. Res. 86 opposes a carbon tax. Carbon taxes are economically destructive, raising the price of energy which, in addition to the direct increase at the pump or on a home heating bill, raises the cost of virtually every good and service throughout the economy. At a time when inflation continues to be stubbornly high, adding a tax on basically all economic activity is an especially harmful idea.
YES votes on these four bills are votes in support of free markets and affordable energy. AEA will include these votes in its American Energy Scorecard.
WASHINGTON DC (03/21/2024) – The Senate Energy and Natural Resources Committee is holding a confirmation hearing today on three new nominees to the Federal Energy Regulatory Commission (FERC). Given the usual glacial pace in which the Senate operates these days, it appears the Senator Joe Manchin, the Chairman of the Committee, is working with President Biden to rush these nominees through the process without much scrutiny. While we know little about two of the nominees, David Rosner and Lindsay See, the third nominee, Judy Chang, has made vocal her opposition to the construction of new natural gas pipelines, the permitting of which is a key function of the FERC.
Given the importance of FERC’s role in shaping U.S. electricity and energy infrastructure markets, senators from both parties should ask some important questions in today’s hearing. More importantly, the Senate should refrain from rushing these nominees through the process until a full and transparent vetting of their qualifications and their views on these important issues has been conducted.
Here are some suggested questions for the nominees:
Questions specifically for Judy Chang:
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WASHINGTON DC (03/20/2024) – Today, the Biden administration finalized a gas-powered vehicle ban that aims to remake the transportation sector and fundamentally upend the American way of life. The regulation mandates electric vehicle adoption by requiring 67 percent of new light-duty and 46 percent of new medium-duty vehicle sales to be EVs by 2032. It will also increase America’s reliance on China for the critical minerals – such as lithium, cobalt, and manganese – required in battery manufacturing.
AEA President Thomas Pyle issued the following statement:
“This regulation is another example of President Biden’s assault on the middle class. The American people should be free to choose the types of cars and trucks that make the most sense for them. This administration wants to take away that choice by forcing Americans into specific vehicles preferred by government agents at the EPA. The Biden regulations will make cars more expensive and ultimately make fewer cars available for Americans. By now, we have gotten used to incredibly damaging and stupid rules from the Biden administration, but this one is in a class by itself.”
Additional Resources:
For media inquiries please contact:
[email protected]
WASHINGTON DC (03/20/2024) – As House Republicans bring a series of bills to the floor aimed at increasing domestic energy production and reducing energy costs for Americans, the Biden Administration moves another step closer this week to forcing the auto industry to shift exclusively to electric vehicles, another in the more than 200 actions the Biden Administration and congressional Democrats have taken to make energy harder to produce and more expensive to purchase in the U.S.
AEA President Thomas Pyle issued the following statement:
“House Republicans are right to focus their attention on energy prices, which continue to be front and center for the many families struggling to make ends meet in this inflationary environment. Meanwhile, the Biden EPA is busy finalizing an internal combustion engine vehicle ban.
The contrast could not be more clear. House Republicans encourage the responsible development of our natural resources and reject policies – like a carbon tax – that Americans overwhelmingly oppose. Meanwhile, President Biden continues to push an agenda that restricts our energy production here at home, takes away our choice, and makes everything more expensive and less reliable.”
Additional Resources:
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For media inquiries please contact:
[email protected]
Texas and California lead the nation in power outages and in wind and solar generation. Since 2019, there have been 263 power outages across Texas–more than any other state–each lasting an average of 160 minutes and impacting an estimated average of 172,000 Texans. From 2019 to 2023, California had 221 power outages, ranking second, and Washington ranked third with 118 outages, based on data from the Department of Energy. Texas has the most wind capacity in the nation and is the nation’s top wind producer and California has the most solar capacity in the nation and is the nation’s top producer of solar power.
Texas
Over the past 5 years, more than a third of Texas’ outages occurred in 2021, when a freeze led to widespread outages and the deaths of at least 210 people around the middle of February. There were 47 outages in February 2021 out of 91 across Texas that year. Mass outages such as the one that occurred during the 2021 freeze are rare. Typically, the outages Texans experience are localized and caused by damage to power lines. Power outages — and other events such as wildfires — are becoming greater risks for utilities as the nation’s power grid infrastructure, much of which was installed more than 50 years ago, cannot handle surging electricity demand, higher rates of intermittency, and extreme weather events. Much of the U.S. electric grid was built in the 1960s and 1970s. While the system has been improved with automation and some emerging technologies, it is struggling to meet the electricity needs of Biden’s energy transition, such as renewable energy resources and growing building and transportation electrification.
In 2022, Texas led the nation in utility-scale wind-powered electricity generation, producing more than one-fourth of the U.S. total, leading the nation for the 17th year in a row. Wind power surpassed the state’s nuclear generation for the first time in 2014 and exceeded coal-fired generation for the first time in 2020. In 2011, Texas was the first, and until 2020 the only, state to reach 10,000 megawatts of wind generating capacity. By February 2023, Texas had nearly 40,000 megawatts of wind capacity, which was more than one-fourth of the state’s utility-scale generating capacity and almost three fourths of its total renewable generating capacity, including from small-scale (less than 1 megawatt) solar installations. In 2022, wind supplied one-fifth of Texas’ in-state utility-scale (1 megawatt or larger) generation.
Texas ranks sixth in the nation in solar power potential. In 2022, the state was the country’s second-largest producer, after California, of solar power. Solar PV capacity at the state’s large- and small-scale facilities increased to more than 13,500 megawatts in early 2023. Solar energy accounted for about 5 percent of the state’s total electricity generation in 2022. Small-scale solar facilities provided about one-eighth of that total. Natural gas-fired power plants supplied about half the electricity generated in Texas in 2022, coal-fired power plants supplied 16 percent, and the state’s two operating nuclear power plants supplied 8 percent.
The Public Utility Commission of Texas, the state’s utility regulator, is requiring Texas utilities to file resiliency plans this year for the first time. These plans would lay out each utilities’ strategies to reduce outages and otherwise harden their infrastructure against weather-related events.
California
Between 2019 and 2023, California had its largest power outages in 2022 (69 outages) and in 2020 (56 outages). In August 2020, hundreds of thousands of Californians briefly lost power in rolling blackouts amid a heat wave, marking the first-time outages were ordered in the state due to insufficient energy supplies in nearly 20 years. The heat wave extended into September and was the state’s hottest and longest for September. For more than a week, the California Independent System Operator (CAISO) — which oversees the electrical grid serving 80 percent of the state — had been calling on residents to conserve their energy use in the later afternoon and evening amid extreme temperatures that sent electric demand on the grid to record levels. Heat waves drive up demand due to increased air-conditioning use. Typically, summer peak load in CAISO was about 30 gigawatts, but on a very hot day, it was over 50 gigawatts–a 60 percent plus increase, and virtually all air-conditioning.
California is second in the nation, after Texas, in total electricity generation from renewable resources and solar energy is the largest source of California’s renewable electricity generation. In 2022, solar energy supplied 19 percent of the state’s utility-scale electricity net generation, increasing to 27 percent of the state’s total net electricity generation when small-scale solar generation is included. In 2022, California produced 31 percent of the nation’s total utility-scale and small-scale solar PV electricity generation and 69 percent of the nation’s utility-scale solar thermal electricity generation. At the beginning of 2023, California had more than 17,500 megawatts of utility-scale solar power capacity– more than any other state—and when small-scale facilities are included, the state had almost 32,000 megawatts of total solar capacity. The state is the nation’s top producer of electricity from solar energy, which generates less power in the evening and virtually none at night as the sun goes down, but that is when Californians arrive home from work and turn their air conditioners up and other appliances on.
In 2022, wind accounted for 7 percent of California’s total in-state electricity generation, and the state ranked eighth in the nation in wind-powered generation. At the beginning of 2023, California had more than 6,200 megawatts of wind capacity. In 2022, natural gas-fired power plants provided 42 percent of the state’s total net generation and nuclear power’s share was about 8 percent, about the same as hydropower’s contribution. According to the Energy Information Administration, California is the nation’s largest importer of electricity from other states, relying upon them for around 30 percent of its electricity.
Nation
Nationally, the number of outages from 2019 to 2023 was 93 percent higher than in the previous five years. Tennessee and Utah were the only states with a decrease in outages in the last 5 years (2019 to 2023) compared to the prior 5 years (2014 to 2018), among states with sufficient data. Tennessee generates most of its power from nuclear, natural gas and coal, which together provided over 85 percent of its generation in 2022, followed by 12 percent from hydropower. Solar energy, biomass, petroleum, and wind energy provided almost all the rest of Tennessee’s net generation—about 3 percent. About 80 percent of Utah’s electricity comes from coal and natural gas plants. In 2022, coal fueled 53 percent of Utah’s total electricity net generation, and natural gas accounted for 26 percent. Almost all the rest of Utah’s in-state electricity generation came from renewable energy sources (16 percent), primarily solar power. Utah generates about one-fifth more electricity than it consumes, and the state is a net supplier of power to other states.
Conclusion
A study has found that power outages have increased by 93 percent across the United States over the last 5 years—a time when solar and wind power have increased by 60 percent. Texas, who leads the nation in wind generation, and California, who leads the nation in solar generation, have had the largest number of power outages in the nation over those 5 years. The U.S. electric power grid is aging but it is being asked to handle increasing demand from President Biden’s forced “green” energy transition along with an increase in generation from intermittent and weather-driven renewables (wind and solar), which are to displace affordable and reliable natural gas and coal power that currently supply almost 60 percent of U.S. generation. That is a prescription for more power outages to come.
*This article was adapted from content originally published by the Institute for Energy Research.
On this episode of The Unregulated Podcast Tom Pyle and Mike McKenna discuss the circus like proceedings of the Senate Budget Committee. Later Carolyn Phippen, a candidate in the GOP primary for Utah’s senate seat, joins the show to discuss the most pressing issues facing the Beehive State and the rest of the country.
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The cost to consumers of two offshore wind projects expected to support New York’s self-imposed climate goals has more than doubled from their original estimates, which were high to begin with. Developers had threatened to cancel their offshore wind projects without higher prices, citing inflation, supply chain challenges and rising costs driven by the pandemic, Bidenomics and Russia’s invasion of Ukraine. The agreements, which still need to be finalized, are expected to keep 1,700 megawatts of offshore wind on schedule for 2026. New York wants to reach 70 percent renewable energy by 2030, but to reach that goal—the highest renewable goal in the nation for 2030, the state will need to dump huge costs on its utility customers. The estimated impact to consumer bills for the two projects will be 2 percent, or about $2 per month for the new 25-year agreements—more than double what was expected in the 2019 agreements. The 2019 agreements, which were canceled, were projected to increase bills between 0.49 percent and 0.9 percent or 73 cents per month. Despite having pre-existing contracts with the state, both projects were able to bid into a November 2023 solicitation under New York state rules that allow bids from wind projects that need new contractual terms to remain financially viable. New York state government officials are walking away from protection of consumers in order to claim they are “leaders” in climate policies.
The two NY projects are the 810-megawatt Empire Wind 1 developed by Norwegian company Equinor and the 924-megawatt Sunrise Wind, slightly larger than the original 880 megawatts expected, developed by Orsted and Eversource. Empire Wind, located about 15 miles south of Long Island has received final federal approval, and Sunrise Wind, located more than 30 miles east of the eastern point of Long Island, expects final approval later this year. The projects are both expected to begin providing power by late 2026. The average development cost of the projects over 25 years is about $150 per megawatt-hour, the “strike price” for offshore renewable energy credits, for energy that is intermittent and weather driven with capacity factors less than 50 percent. In contrast, geothermal energy producers are using hydraulic fracturing to ultimately get costs down to $100 per megawatt hour for renewable energy that performs 24/7 and is reliable and carbon dioxide free.
The new offshore wind contracts are expected to include new economic benefit commitments beyond those agreed to by the developers in their 2019 contracts: $188 million in purchases of U.S. iron and steel; $32 million for disadvantaged communities; $16.5 million for wildlife and fisheries monitoring and a labor peace agreement for operations and maintenance. The agreements also maintain commitments by Empire Wind to utilize and support the South Brooklyn Marine Terminal as an assembly and staging port for offshore wind construction and for Sunrise Wind to use the Port of Coeymans near Albany for some foundation components. Both developers, Equinor and Orsted, are European companies.
The earlier awards for the projects had a net present value of $2.2 billion, but the current value is not yet available from the Governor’s office. The strike prices in nominal dollars (not adjusted for inflation) for the original agreements were $110.37 per megawatt hour for Sunrise Wind and $118.38 per megawatt hour for Empire Wind 1. Sunrise Wind sought a requested increase to their average strike price of 27 percent while Empire Wind 1 sought a 35 percent increase. The increase in strike price from the previous contracts averaged about 30 percent. According to a New York government agency, the new cost estimates were “not directly comparable” since they are based on forecast energy prices and other factors.
A third bidder, the 1.3-gigawatt Community Offshore Wind 2 project, is “waitlisted” and may be awarded in the future. Two other large offshore wind projects have canceled their contracts, hurting the state’s ability to reach its 2030 renewable target. Equinor opted not to rebid its second offshore wind project, the 1,260-megawatt Empire Wind 2 facility, after canceling its existing contract in January. Instead, Empire Wind 2 will be “matured for future solicitation rounds,” according to the company. Its former partner, BP, did not indicate that it planned to rebid the Beacon Wind offshore wind facilities in the latest auction. New York plans a public webinar on the two re-awards on March 19, where the public may learn more about their decision to make consumers pay so much more for energy than the original prices.
New York is not the first or only state to allow financially distressed offshore wind facilities to re-bid their contracts after several project cancelations over the past few years. Other states, including New Jersey, Massachusetts, Rhode Island and Connecticut, have allowed similar actions. New Jersey, for example, agreed to contracts with three developers that included prices similar to those in New York’s new agreements. These solicitations have allowed projects that were nearing construction to continue as their governments seem unconcerned about higher costs for consumers in their states. Other offshore wind development projects remain locked into contracts that they will either need to cancel or rebid in order to remain financially viable.
Nationwide Goals
Nationwide, the Biden administration has set a goal of installing 30 gigawatts of offshore wind by the end of this decade. Current estimates are that half of that are likely to be built. As of February, the United States had installed over 240 megawatts of offshore wind capacity off the coasts of New York, Massachusetts, Rhode Island and Virginia — up from just 42 megawatts a year ago. Biden’s offshore wind targets were thrown into jeopardy after financial hardships and logistical challenges hit project developers as inflation skyrocketed and supply chains were broken.
Supply-chain constraints, rising material costs, higher interest rates and permitting delays made it more expensive and less profitable to develop these massive and complex offshore wind projects. The developers most affected by these conditions were the ones that had already signed agreements with utilities or public agencies—agreements that were not flexible in renegotiating costs. Companies signed the long-term agreements early in the planning process to specify the rate customers will pay for the electricity and how much of the energy they will use. Last year, developers with contracts signed before the pandemic found it impossible to turn a profit under their existing terms. In 2023, developers canceled contracts to sell 5.5 gigawatts of offshore wind power from projects in New Jersey, Connecticut and Massachusetts, incurring billions of dollars in penalties. These experiences cast doubt on Biden’s belief that wind and solar are the cheapest forms of energy.
Conclusion
Last June, offshore wind developers petitioned New York state’s Public Service Commission for increased payments under their contracts. Those petitions were denied and new solicitations were made in November. Two of those are about to be awarded, covering development cost increases of about 30 percent. Under the new agreements for the 25-year contracts, consumers will be paying more than double the bill increase that was set under the original contract agreements in 2019. New York is aiming to build 9,000 megawatts of offshore wind capacity by 2035, and this solicitation will cover 1,700 megawatts with a late 2026 operational date. Other states are also offering new solicitations to keep their offshore wind projects viable. Despite that, a number of offshore wind projects have been canceled with developers paying penalties. President Biden wants 30,000 megawatts of offshore wind by 2030—only half that amount is expected, which is good for consumers, who will be paying heavily for the privilege of receiving electricity generated by offshore wind that is more expensive than electricity generated from natural gas.
*This article was adapted from content originally published by the Institute for Energy Research.
Supposedly, the reason for switching to electric vehicles from gasoline-powered vehicles is to reduce carbon dioxide emissions by using less gasoline and thus oil. However, a country that was way ahead of the United States in the transition to electric vehicles found that its oil demand did not decline from EV use despite electric vehicles making up 64 percent of new car sales and despite thousands of dollars in annually recurring subsidies. In fact, Norway’s ownership and use of gas-powered cars increased, especially for long trips where electric vehicles have a range problem. Despite Norway having some of the “greenest” electricity in the world with its vast hydropower resources, a Norwegian EV owner needs to get 45 years of use out of the vehicle’s imported EV battery, which has an expected life of 15 years, to offset the global carbon dioxide emissions from producing it.
Norway’s EV Incentives
The Norwegian government offered consumers massive subsidies to purchase an electric vehicle. New electric vehicles were exempt from several onerous taxes and the 25 percent value added tax (VAT). On average, a large new ICE vehicle would be subject to $27,000 in various taxes and an equivalent EV would pay none. Electric vehicles were also exempt from any road or ferry tolls, were allowed to use bus lanes, were offered free parking and charging in municipal areas, and had “charging rights” in apartment buildings. Although Norway rolled back some of these subsidies starting in 2017, an Oslo resident can still expect EV benefits that total $8,000 annually. Norway can do this in part because they have the largest sovereign wealth fund in the world, made possible by revenue generated by their oil and gas production. The fund is approaching $1.5 trillion, representing about $250,000 per resident.
Norway spends nearly $4 billion annually on EV subsidies—about the amount it spends on total highway and public infrastructure maintenance. Because EV subsidies favor high-income urban citizens, who take advantage of free tolls, parking, and charging and avoid the onerous tax on larger luxury vehicles, public scrutiny made the Norwegian government reduce several subsidies. Municipal parking is no longer free, EV passengers (not the vehicles) are subject to certain tolls, and a partial purchase tax was introduced on new electric vehicles. The changes will likely reduce EV penetration. For example, in 2022, Sweden eliminated several subsidies that resulted in a 20 percent drop in EV sales.
Norwegians are reluctant to give up their ICE vehicles, even after purchasing an electric vehicle. Two-thirds of Norway’s EV households own at least one ICE vehicle. From 2010 to 2022, Norway added 550,000 electric vehicles, but the number of ICE vehicles on the road, rather than falling, increased by 32,630. While the population grew by 11 percent, the total number of passenger cars grew by 25 percent. Norwegians are using their electric vehicles when they want to avoid a road or ferry toll, have access to free parking or charging, or avoid congestion by using bus lanes. Otherwise, they use their ICE vehicle.
Norway’s electricity demand has increased as it shifted from fossil fuels to electricity for transportation, heating, and lighting. Since 2010, Norwegian electricity demand increased by 20 percent and total primary energy demand for all forms of energy increased by 5 percent. The shift to electric vehicles did little to reduce overall energy consumption despite claims they are far more efficient.
The Efficiency of EVs vs. ICE vehicles
Electric vehicles are less energy efficient than ICE automobiles when all the costs of the supply chain are considered, including the costs of both the battery and the renewable power required to make “carbon-free” electric vehicles. Manufacturing an electric vehicle consumes far more energy than an ICE vehicle. Most of the additional energy is spent mining the materials for and manufacturing an EV’s lithium-ion battery. Mining companies use energy-intensive trucks, crushers, and mills to extract each battery’s nickel, cobalt, lithium, and copper and the manufacturing process consumes vast amounts of energy. While many analysts tout the carbon savings from displacing fossil fuels, they are not adequately accounting for the battery’s increased energy consumption. Once these adjustments are made, most, if not all, of the EV’s carbon advantage disappears.
Throughout the history of energy, there has not been an example where a new technology with inferior energy efficiency has replaced an existing, more efficient one. As a result, electric vehicles will fail to gain widespread adoption despite massive subsidies and the threat of ICE bans. Recently, both Ford and Hertz had to scale back their EV initiatives due to lower-than-expected consumer interest.
The Efficiency Issue in the “Green” Transition Is Even More Widespread
Global energy efficiency, which was improving by 1.9 percent annually for more than a decade, has been growing at only half that rate since 2021. The “green” energy transition, pushed by politicians, is actually making it more difficult to reduce carbon emissions because it is stimulating more energy consumption overall through increasing electricity demand and encouraging inefficient solar and wind investments that result in more emissions due to increased mineral mining and less energy output.
The Irony Continues
As Western countries are pushing electric vehicles and solar and wind power, China is building coal plants to produce the “green” technologies that the West needs for its energy transition. China’s BYD car maker has surpassed Tesla in EV sales; China manufactures over 70 percent of the world’s solar panels and it dominates the world in the processing of critical minerals needed for EV, “green” energy technology and weapon production. Subsidizing electric vehicles and green energy technologies actually gives China and other developing nations the incentive to use more fossil energy and release more carbon emissions making these products for Western countries whose governments encourage them.
Conclusion
The Biden administration needs to look at Norway for an understanding of the use consumers put to electric vehicles and ICE vehicles to realize that subsidies and regulatory mandates will not make consumers march to those orders. Norway’s experience brings out the reality that electric vehicles are purchased by the wealthy who get wealthier from government subsidies that make their lives better by providing benefits such as free parking, use of bus lanes and free tolls. Norway did not reduce oil use from selling more electric vehicles and thus its EV movement did not reduce carbon emissions. Instead, the movement resulted in more government spending. That is what President Biden is doing with the energy transition in the United States—spending government funds. The carbon emission reductions that have occurred in the United States have resulted from switching from coal to low-cost natural gas in the electric power sector, largely before Biden became President.
*This article was adapted from content originally published by the Institute for Energy Research.