Search anytime by typing below

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

*Please fill in all items

AEA President Cheers Trump Administration’s Approval of $40 Billion Alaska LNG Project

August 21, 2020 by Leave a Comment

“This is what American Energy Dominance Looks Like.”

WASHINGTON DC (August 21, 2020) –  American Energy Alliance President Thomas Pyle today commended the Department of Energy and President Trump for the approval of the long-sought Alaska LNG project, which would make Alaska a player in world energy markets, create tens of thousands of good paying jobs and extend America’s ‘soft power’ into growing global markets for liquefied natural gas (LNG).

“The approval of this project now, at a time when the world and the U.S. is unsure about its future as a result of the coronavirus, is an optimistic nod to the future as we inevitably get back to work Making America Great Again by building big things.”  “This is what American Energy Dominance looks like,” Pyle added.

The proposed 800-mile pipeline, liquefaction plant and marine terminal is a world class project that complements the existing 800-mile Trans Alaska Pipeline which to date has transported almost 20 billion barrels of American oil to replace foreign oil.

For media inquiries please contact:
[email protected]

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

Beijing Is Hoodwinking Biden

August 20, 2020 by Leave a Comment

While Democratic Party presidential candidate Joe Biden is touting his $2 trillion climate plan as a way to stimulate the U.S. economy from the lockdown caused by the coronavirus, China is building coal-fired plants and is using record amounts of diesel in its construction program. China is currently planning to build over 200 gigawatts of coal-fired generating capacity—almost the same amount of coal-fired capacity that the United States currently has in its generating fleet. Once built, China will have more coal-fired capacity than the entire generating fleet in the United States considering all power sources. 

Since 2000, China’s coal fleet has grown five-fold and now totals 1,040 gigawatts—nearly half the global total or about 5 times as large as the coal fleet in the United States. China is one of 80 countries in the world using coal power—up from 66 in 2000. Coal generated 36 percent of the world’s electricity in 2019, close to its highest share in decades and a greater share than any other generating fuel. China, however, almost doubled that share, generating 65 percent of its electricity from coal in 2019, using a very young coal fleet with generators averaging 14 years of age and capable of operating for 40 years or more.

China is investing heavily in the country’s infrastructure, building power plants, new roads, railway lines, and sewage systems and manufacturing the equipment necessary for those projects. These large investments helped make China the first major economy to see its economy rebound after the coronavirus outbreak, with output increasing 3.2 percent from April through June compared to the same period last year.

Truck sales in China—the world’s largest freight market—are expected to hit a record of 3.76 million vehicles in 2020, up by 18 percent from 2019. Heavy-duty truck sales are expected to top 1.4 million units this year, following growth of over 50 percent each month between April and June.

Booming online shopping during the lockdown resulted in an increase in express deliveries. In June, China’s deliveries hit a record 7.47 billion, or nearly 3,000 deliveries every second. As a result, sales of light trucks, which are widely used for deliveries and moving construction materials, are estimated to increase 18 percent this year.

Source: Reuters
Source: Reuters

Diesel Demand

China’s construction and delivery boom is expected to result in diesel demand reaching a record this year powered by trucking activity. Diesel accounts for about 30 percent of China’s oil demand and is expected to increase by about 2 percent in 2020, which translates into a 60,000 to 90,000 barrel-per-day increase in total diesel consumption, reaching a record of 3.8 to 4.1 million barrels per day. The rebound began in March/April, shortly after China began to reopen its economy from the coronavirus lockdown. Diesel’s boom is a result of government stimulus spending on infrastructure, robust mining activities, and an e-commerce boom.

China’s Refinery Production

China’s refinery output increased 12 percent in July from the same month a year earlier, hitting the highest on record for any single month, as several major state plants resumed operations after maintenance overhauls. Two of Sinopec Corp’s top plants—Zhenhai and Tianjin—and PetroChina’s Dalian plant resumed production after being off-line for several months. China processed 59.56 million metric tons of crude oil in July—about 14.03 million barrels per day. Refinery throughput for the first seven months of this year totaled 378.65 million metric tons, or about 12.98 million barrels per day—an increase of 2.3 percent from the same period a year ago. 

Oil and Natural Gas Production

China’s domestic crude oil production increased 0.6 percent in July compared with the same month a year ago to 16.46 million metric tons—about 3.88 million barrels per day. Production for the first 7 months of this year totaled 113.5 million metric tons—1.4 percent higher than the same period last year.

Natural gas production increased 4.8 percent in July from a year earlier reaching 14.2 billion cubic meters, and production for the first seven months of this year increased 9.5 percent to 108.3 billion cubic meters.

China Continues to Import Crude Oil

Not only is China producing more domestic oil, but it is also importing oil. China is the world’s biggest oil importer, and it continues to import despite its storage tanks being filled to capacity. According to brokers, at least 80 ships have been waiting for more than a month to unload their cargo in northern Chinese ports where congestion is the most severe. Over half of the vessels are very large crude carriers, which can move up to two million barrels each in a single sailing.

As demand for oil has declined during the coronavirus pandemic, freight rates have declined from an average $129,000 a day in March and $176,000 in April to about $15,400 on the benchmark Middle East-to-China route, which is at least $12,000 below average break-even levels for such ships. China is capitalizing on the lower rates by moving as much as possible at COVID-induced bargain-basement rates.

Conclusion

China’s economic approach in the wake of the coronavirus differs significantly from Joe Biden’s $2 trillion climate plan to reduce fossil energy use. China is increasing fossil energy use—building coal-fired power plants, increasing its oil and natural gas production and refinery output, and importing crude oil. Given that coal plants can easily last half a century or more, with a fleet of over 1,000 gigawatts in coal, it does not look like China is taking action toward its commitment to the Paris Agreement any time soon. Rather, it is helping its economy recover by using fossil energy—the fuel that has fired the furnaces of progress since the dawn of the Industrial Revolution.

*This article was originally published by the Institute for Energy Research.

For more information on these issues check out AEA’s Vote Energy 2020 election hub.

Filed Under: Blog Tagged With: , , , , , , , , ,

Expensive Electric Vehicle Makers are Ridin’ With Biden

August 19, 2020 by 5 Comments

Democratic Party presidential candidate Joe Biden’s $2 trillion energy plan includes Senate Minority Leader Chuck Schumer’s Clean Cars for America proposal. To enable the proposal, Biden will provide consumers rebates to swap old, less-efficient vehicles for newer American vehicles along with targeted incentives for manufacturers to build or retool factories to assemble zero-emission vehicles, parts, and associated infrastructure. These supposedly zero-emission vehicles are still not capturing the American public’s hearts or pocketbooks.

In 2018, fewer than 400,000 electric vehicles were sold in the United States despite the market supporting a 17-million-plus sales level for about five years—almost all of it gasoline-powered. And, electric vehicle sales dropped significantly in 2019.  Electric vehicles have been widely available for more than a decade, which is enough time for a market to develop for a new type of vehicle. That electric vehicle sales growth has been weak relative to expectations indicates that people fundamentally do not want to purchase them. Given a choice, few Americans purchase electric vehicles. In the United States, people want SUVs and pickups. According to IHS Markit, SUVs, vans, and pickups made up 72 percent of U.S. vehicle sales in 2019, while sedans made up 22.1 percent. Consumers are wary of the poor range of electric vehicles, the lack of refueling stations, the long time to refuel, their high cost and loss of trunk space for batteries. They also prefer larger vehicles.

Electric vehicles have been and continue to be supported by federal and state incentives, which is why the market exists. But that market is mainly for elites who can buy Teslas, BMWs, and other high-priced electric vehicles, and most are in urban areas where vehicles travel short distances. The federal tax credits consist of $7,500 per vehicle (for manufacturers who have produced less than 200,000 electric vehicles) and 30 percent for refueling stations. And state rebates include California’s rebate of up to $7,000 per car, Oregon’s rebate of $2,500 per car, and New Jersey’s rebate of up to $5,000 per car, though in the latter case, program funding has been cut by over 50 percent as state revenues fall due to the coronavirus pandemic. In California, which provides the strongest incentives for purchasing electric vehicles, electric vehicle sales declined in 2019, coinciding with the reduction in tax credits available to high-income individuals.

New Issues

Researchers see two new challenges to electric transportation: degraded batteries stemming from rushed charging and spikes in power demand as plug-in cars flood U.S. roadways. The current life of big, expensive car batteries can be degraded by what is called “lithium plating,” which occurs on car battery terminals when attempting superfast charging. Lithium is a soft, silvery-white and soluble metal that tends to be unstable. During fast charging, instead of being absorbed into the graphite battery terminal, lithium can solidify, forming plates on the terminals. Once lithium plating occurs, the cell becomes increasingly unstable, potentially leading to battery failure. Faster charging shortens battery life, which is expensive because lithium-ion batteries can account for as much as 65 percent of the price of an electric vehicle. The only option currently available unless one wants to contribute to the destruction of two-thirds of an electric vehicle’s value is slower charging, which is impractical for many people.

Steps can be taken to minimize plating damage such as using the EV’s motors to heat the battery before recharging. Another is to charge the vehicle slowly overnight, which may be difficult to achieve for owners that live in apartment buildings, have city street parking or do not have access to a nearby charging station. And, if owners charged their vehicles overnight at the same time as they turn on their appliances, televisions, and air conditioning, power grids could become overloaded creating spikes in demand. Also, some drivers may not have the patience to wait while an electric vehicle recharges. Currently, software prevents a battery from being fully recharged at high speeds.

To be competitive with gasoline vehicles, electric vehicles need to be capable of a full charge in 15 minutes or less. Automobile makers know that electric vehicles need to be reasonably priced, able to travel 300 miles on a single charge and allow fast charging. Currently, they are able to achieve only 2 of these 3 requirements, choosing to value range and moderate prices over fast charging.

Electric Vehicles are Not Emission Free

Electric vehicles are not zero-emission: it takes more energy to manufacture a battery-operated electric vehicle than an internal combustion engine because the manufacture of batteries is very energy intensive. As battery size increases to enable bigger cars and longer range, the carbon dioxide footprint of electric vehicles can surpass that of equivalent internal combustion vehicles, even if the electricity used is increasingly carbon-free. An International Energy Agency study suggests that, on average, for a mid-sized car, greenhouse gas emissions are around 25 percent lower for a battery-operated electric vehicle compared to an equivalent internal combustion engine. Allowing for uncertainties, if the entire light duty vehicle flee were converted to battery, an overall greenhouse gas savings would probably be around 15 to 20 percent. In addition, the end-of-life recycling cost is higher for electric vehicles than for internal combustion vehicles.

Conclusion

Biden’s environmental plan and Schumer’s Clean Cars for America are not panaceas for a carbon-free transportation system due to the state of the electric vehicle battery technology, the mix of fuels used in generating electricity, and the requirements of vehicle owners. Currently, vehicle owners can “fill up” in no time and there are gas and diesel stations galore in the United States. Encouraging American vehicle owners to switch to a higher priced vehicle with longer refueling times and less range will require a unique and persuasive marketing strategy that is not noticeable in these plans, and unlikely to be accepted by a public that is very careful about the vehicle they purchase to fit their individual needs.

*This article was originally published by the Institute for Energy Research.

For more information on these issues check out AEA’s Vote Energy 2020 election hub.

Filed Under: Blog Tagged With: , , , ,

California Previews Biden’s Energy Plan

August 18, 2020 by Leave a Comment

California does it again. In 2001, California experienced rolling blackouts due to energy market manipulation by energy wholesalers and a shortage of pipelines. Now, Californians are again facing rolling blackouts, and this time it is due to California’s forced reliance on solar and wind power. Due to a severe heatwave and without the wind blowing and the sun shining, California’s day-ahead electricity prices spiked at above $1000 per megawatt-hour on August 14. California’s renewable portfolio standard mandates that 60 percent of its electricity must come from renewable energy (mainly wind and solar power) by 2030.  Now, residents are asked to conserve electricity to keep the power on—something most other states do not have to endure. This should be a warning to America about the risks of Biden’s Clean Energy Standard that would require 62 percent of our electricity which is now produced from natural gas and coal to come from non-carbon sources, which would primarily be wind and solar power.

The California Independent System Operator, which manages the power grid, declared an emergency shortly after 6:30 p.m. on August 14 and directed utilities around the state to decrease their power loads. Pacific Gas & Electric, the state’s largest utility, needed to turn off power to about 200,000 to 250,000 customers in rotating outages for about an hour at a time. Other utilities were told to do the same, affecting up to 4 million people. The emergency declaration ended just before 10 p.m. The requirement to shed load resulted from temperatures hitting triple digits in many areas, resulting in higher air conditioning use. In addition, cloudy weather from the remnants of a tropical weather system reduced power generation from solar plants. California’s solar mandates are making the state much more reliant on the weather for electricity production.

California’s Anti-fossil Fuel Policies

California generally produces a surplus of solar energy during the day and when that happens, other power generators are ordered to cut back their production so that the electric grid is not overloaded. On Friday and Saturday, August 14 and 15, about 1,000 megawatt-hours were curtailed—enough to power 30,000 homes. This curtailment resulted in supply shortages as solar energy output plunged at the end of the day with the electricity demand remaining high.

Many of California’s natural gas and nuclear plants have had to shut down because they cannot compete with heavily subsidized renewable energy. For example, a 10-year-old natural gas power plant in California’s Inland Empire is being prematurely shuttered this year despite being built to operate for forty or more years. Also, California’s state water regulations are forcing the shutdown of natural gas plants along the coast that can quickly ramp up generation during peak demand periods or when solar power plunges. Because of policies promulgated by California’s anti-fossil energy politicians, Californians are paying for new renewable power when they already have natural gas capacity readily available to meet demand 24/7.

Because the spot price for power in the summer can increase more than 30-fold from noon to dusk, California’s utilities are forced to build expensive batteries to store solar energy that can be released in the evening, which will cost Californians even higher electricity prices, despite its prices already being one of the highest in the country. Utilities do not mind this result because new capital investment necessitated by government actions ultimately means higher prices for consumers and higher profits for utilities.

Conclusion

California’s blackouts are a product of its politically-determined reliance on intermittent, unreliable renewable energy, not a product of heatwave.  So far, California’s environmental policies have resulted in 1.3 million megawatt-hours of reliable power being curtailed this year. Due to the state’s renewable portfolio standard and its subsidization of wind and solar energy, the state is suffering from the loss of reliable power that cannot compete with the state’s environmental policies. Natural gas and nuclear power plants are being shuttered. In fact, the state’s only remaining nuclear plant, Diablo Canyon, which provides 20 percent of the state’s carbon dioxide-free energy and 9 percent of its electricity, is scheduled to shut in a few short years. As a result, when temperatures rise, Californians need to curtail electricity usage and suffer from rolling blackouts as well as paying some of the highest electricity prices in the nation. Currently, most states do not need to endure the loss of power when temperatures escalate due to sufficient power from reliable sources—coal, natural gas, and nuclear power.

Americans need to be aware of Joe Biden’s Clean Energy Standard, which would put them in the same position as Californians, who are reliant upon intermittent wind and solar power. This episode should be a wake-up call for politicians thinking of jumping on the green energy bandwagon; it appears the wagon is headed for a cliff.

*This article was originally published by the Institute for Energy Research.

For more information on these issues check out AEA’s Vote Energy 2020 election hub.

Filed Under: Blog Tagged With: , , , , , , , ,

AEA Endorses Donald J. Trump for President of the United States

August 18, 2020 by 6 Comments

As President, Trump delivered on the promises he made
during his first-ever run for political office.

WASHINGTON DC (August 18, 2020) – The American Energy Alliance, the country’s premier pro-consumer, pro-taxpayer, and free-market energy organization, endorses Donald J. Trump’s re-election for President of the United States. Thomas Pyle, president of the American Energy Alliance, issued the following statement:

“President Trump, more than any other President in the last 35 years, deserves re-election and another four years. His accomplishments in his first term are more impressive, extensive, and material than most Presidents who have served two terms. His achievements with respect to energy, the environment, and regulations are especially noteworthy.

“Under the leadership of President Trump, the United States has become the world’s largest producer of oil and natural gas, greatly enhancing our energy security in the process.

“During his first term, President Trump has kept energy prices low, which helps the poor, the elderly, those on fixed incomes, and local institutions like schools and hospitals. Trump also refused to participate in the defective Paris Accord and ensured that the United States’ energy production and economic prosperity will not be impeded by international bureaucracies.

“As promised, President Trump has reduced duplicative regulatory burdens and helped save American consumers thousands of dollars each year in needless regulatory costs. This is especially true at the EPA. Under Trump’s direction, the EPA has reworked the broken cost-benefit analysis process, created and encouraged transparency in science, and avoided the double-counting of benefits to justify new and expansive rules, ensuring business and consumers will not bear excessive and pointless regulatory costs. The Trump Administration created new, workable fuel efficiency rules to ensure consumers – rather than bureaucrats in D.C. and Sacramento – are able to choose what vehicles work best for them and their families.

“If given a second term, President Trump will no doubt pursue and achieve numerous additional victories for the American people, including reducing the size and influence of the federal government in our daily lives, maintaining our status as the number one energy producer in the world, and reducing the involvement of the federal government in energy markets, thereby putting those decisions in the hands of consumers, families, and businesses.

“For all of these reasons and many more, I am proud to announce AEA’s endorsement of Donald J. Trump for re-election and look forward to four more years of putting America’s energy interests first.”

AEA’s letter of endorsement can be found here.

A comparison of President Trump and Joe Biden can be found here.

Additional Resources

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

Another Promise Kept: President Trump Still Cleaning up the Regulatory Mess Inherited from the Obama-Biden Administration

August 13, 2020 by 1 Comment

EPA’s Improvement of New Source Performance Standards for America’s natural gas and oil industry added to the growing list of presidential accomplishments.

WASHINGTON DC (August 13, 2020) – Today, Thomas Pyle, President of the American Energy Alliance, issued the following statement in support of the Environmental Protection Agency’s (EPA) two finalized rules updating air regulations for the domestic natural gas and oil industry, commonly known as the methane rule:

“President Trump’s EPA has taken another important step in curbing the regulatory excesses of the previous administration. Today’s actions by the EPA are a recognition that the Obama-Biden methane rule was duplicative, costly, and unnecessary. Cleaning up the 2016 methane mess will allow our independent natural gas and oil producers to continue to provide American families with the low-cost gasoline and clean burning electricity that powers our lives.

The numbers tell the story. From 1990 through 2015, a year before Obama-Biden methane rule was finalized, natural gas production in the U.S. went up by 55 percent, while methane emissions from natural gas production went down by 23 percent. Recent data on methane reductions for the Permian and Appalachian basins is even more dramatic and further proof that the hysteria from the green left and the media surrounding this rule is completely unwarranted.

The green left will pull from the same, tired playbook and claim that this is an environmental rollback and an attack on human health. Don’t fall for it. The reality is, they are upset that President Trump has taken another important step towards ensuring we have both a vibrant economy and a healthy environment. More importantly, it is a recognition that the free market is a more powerful driver of environmental progress than top down government control.”


According to the EPA, the two actions today will yield $750 to $850 million in net benefits over the period from 2021-2030, (7 percent and 3 percent discount rates, respectively) or an annualized equivalent of about $130 million a year. The volatile organic compounds (VOC) regulations for production and processing, which are the compounds that actually are harmful to air quality, will remain in place.

For more details on the impressive record of the natural gas and oil industry in both increasing production and reducing emissions, click here.

Additional Resources

For media inquiries please contact:
[email protected]

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

Biden Taps Anti-Gas Zealot For VP Spot

August 13, 2020 by 1 Comment

A U.S. Department of Energy study has found tremendous opportunities for the Appalachian Basin because of the shale gas revolution and the region’s abundant coal reserves. According to the report, a petrochemical hub and a next-generation manufacturing center could develop in Appalachia, a region including West Virginia and parts of Kentucky, Ohio, and Pennsylvania, because of its abundance of natural resources and proximity to markets in the U.S. East Coast and Midwest. The potential for downstream manufacturing using petrochemical derivatives including ethylene and plastic resins is enormous. During the coronavirus pandemic, petrochemicals have been and are still used to produce personal protection equipment including latex gloves, N95 masks, and plastic face shields that have been critical for front-line workers.

The Appalachian Basin is the number one source of low-cost natural gas in the United States because of hydraulic fracking and horizontal drilling technology and it is becoming a major producer of natural gas liquids, including ethane, propane, and butane. Natural gas from the Marcellus and Utica shale basins are increasingly fueling power plants to produce electricity and is used in glass, steel, aluminum, and cement manufacturing and as a feedstock for fertilizer, chemicals, and plastics. 

But, the Biden-Harris ticket wants to call an end to low-cost natural gas produced in shale basins by banning hydraulic fracturing. Biden indicated that he would ban new hydraulic fracturing in his debate with Bernie Sanders in March 2020, although he would not admit to the ban plan when campaigning in Pennsylvania this year. Also, in September 2019 during a CNN town hall event, Kamala Harris said “There is no question I am in favor of banning fracking.”

Current and Future Potential 

Appalachia was the birthplace of the U.S. petrochemical manufacturing industry in the early 1900s, and with Appalachia’s abundance of gas and natural gas liquids, the industry is returning. Currently, ethane production in the Appalachian Basin totals about 250,000 barrels per day. But by 2025, that volume is projected to more than double to 640,000 barrels per day. Royal Dutch Shell is planning to use the ethane in an ethane cracker that it is building in Beaver County, Pennsylvania, and PTT Global Chemical has plans for a similar facility in Belmont County, Ohio. The facilities together represent an investment of $16 billion to over $20 billion and will create 1,200 permanent jobs and 12,000 construction jobs.

With propane production expected to reach 300,000 barrels per day by 2025, the opportunity exists to develop infrastructure to convert propane to polypropylene plastic resin. There are also opportunities for butane, which is used in refineries, and ammonia, urea, methanol, and ethylene production. Each of those facilities would produce petrochemical derivatives that are needed for the production of chemicals, plastics, solvents, synthetic rubber, antifreeze, pharmaceuticals, and other products. Currently, the Appalachian Basin annually produces $30 billion in plastic consumer goods.

According to the American Chemistry Council, the possibilities in the petrochemical sector could result in an economic expansion of $28 billion a year and the creation of 100,000 jobs in the Appalachian region.

But, the Biden-Harris ticket would call an end to this potential shale gas renaissance because their plans would destroy the shale gas industry, which now provides the vast majority of our natural gas. Capitalizing on the benefits of the shale gas revolution requires maintaining the region’s ability to drill, produce, and transport natural gas, which besides allowing hydraulic fracturing, would include streamlining the siting and permitting of pipelines and accelerating research and development that offers the potential to double shale gas wellfield productivity. 

Biden’s climate change plan proclaims “that every federal infrastructure investment should reduce climate pollution” and would require “any federal permitting decision to consider the effects of greenhouse gas emissions and climate change.” That is an indication Biden would make it difficult for developers to obtain federal permits to build fossil fuel infrastructure such as pipelines. To slow the permitting process, Biden could require onerous and lengthy reviews to evaluate whether a project’s economic impact is outweighed by its potential emissions impact, i.e., he could make the process so burdensome and expensive for pipeline developers that they cancel the project. This approach should be contrasted with China’s plan. China recently formed a $56 billion conglomerate to build and operate the country’s growing natural gas pipeline system. 

Conclusion

Appalachia has been hurting from the decline in coal use due to competition from low-cost natural gas and due to state mandates and federal and state subsidies for renewable technologies. Its proud manufacturing history has been eroded by the offshoring of those industries to China and other countries. However, the region could have an economic renaissance from low-cost natural gas and natural gas liquids production, and petrochemical and manufacturing development, which is already beginning and of which more is planned. But, that boom can only occur if hydraulic fracking is allowed to continue to be used and regulations prohibiting infrastructure development are streamlined. The Biden-Harris ticket would not allow Appalachia to benefit from such a boom that the U.S. Department of Energy indicates could result from such a private/public partnership.

*This article was originally published by the Institute for Energy Research.

For more information on these issues check out AEA’s Vote Energy 2020 election hub.

Filed Under: Blog Tagged With: , , , , , , , , , , , ,

Biden’s Plan to Sabotage America’s Electric Grid

August 10, 2020 by 1 Comment

Joe Biden’s $2 trillion climate plan is supposed to eliminate carbon dioxide emissions from the electric sector by 2035. In 2019, 62 percent of U.S. electricity generation was produced from natural gas, coal, and petroleum products—the energy sources that will need to be replaced if Biden’s plan goes into effect. Assuming that Biden’s plan allows for nuclear and hydroelectric power to be part of his clean energy standard (something environmentalists have fought against in the past), only 38 percent of current generation would count toward that mandate. 

Source: Energy Information Administration

In the 16-year period from 2003 until 2019, the share of electricity from nuclear, hydroelectric and other renewable energy increased by 36 percent. Assuming that electricity demand in 2035 does not increase from the level it reached in 2019, and assuming that the same percentage increase could occur over the next 16 years, the share of generation from those “clean” generating sources would only be 50 percent—just half of what Biden’s mandate is by 2035. That’s a lot of assumptions since nuclear power is being reduced in the United States and currently produces almost twice as much electricity as wind, solar, geothermal, and biomass combined. And, if electricity demand increases, which it is likely to do once the United States recovers from the coronavirus pandemic, the share would be even lower. 

The Energy Information Administration, in its Annual Energy Outlook 2020, forecasts that market forces would only get the Biden “clean energy” share to reach 46 percent. All of the increased generation would be from renewable energy, which almost doubles over the 16-year period since new nuclear power is too expensive to compete on a market basis. By 2035, wind generation doubles and solar generation increases by 348 percent assuming the wind production tax credit is phased out next year and the investment tax credit for solar is decreased to 10 percent for commercial, industrial, and utility solar farms in 2022, as current law requires.

Biden’s Daunting and Costly Challenge

In 2019, according to BP’s Statistical Review of World Energy, natural gas-fired generators produced about 1,700 terawatt-hours of electricity (38 percent of U.S. generation) and coal-fired plants produced about 1,050 terawatt-hours, for a total of 2,750 terawatt-hours, which together is about half of the electricity that China produced from coal alone. Three more comparisons are:

  • Replacing that quantity of electricity (2,750 terawatt-hours) with non-carbon sources would require as much nuclear capacity as now exists in the world.
  • Replacing that 2,750 terawatt-hours of energy per year with solar power would require 25 times as much solar capacity as now exists in the United States or almost four times as much as exists in the world.
  • Replacing it with wind would require installing nine times as much wind capacity as now exists in this country or about twice as much as current global capacity.

Under Biden’s plan, this would need to be accomplished in the next 15 years. 

The wind production tax credit has been in existence for almost 30 years and has resulted—along with state mandates, which 30 states have endorsed—in 7.3 percent of U.S. generation from wind in 2019. So, Biden is saying in the next 16 years, he needs to get about 9 times that amount of wind, or 25 times as much solar, or a combination of the two, replacing perfectly good generation capacity that the American public has already paid for and which can last 20 to 50 more years, in most cases. If that is not a daunting and expensive task to ask the American public to buy into, it is unclear what would constitute one. This would be profitable for regulated utilities which make their money by capitalizing new equipment of any kind, but terrible for consumers who would have to pay for all this new and unnecessary generating capacity. This is essentially akin to an American family being told to get rid of 62 percent of its possessions that are in perfectly good condition and requiring them to replace them with more expensive objects.

Further, Wood Mackenzie estimates the cost of full decarbonization of the U.S. power grid to be $4.5 trillion, given the current state of technology. That cost would amount to $35,000 per household or about $2,500 per year over the 14 year period that Biden would have to implement the action should he get elected and take office in 2021. Clearly, Biden’s $2 trillion will not go very far, particularly since it is also supposed to fund energy efficiency improvements in buildings, more hybrid and electric vehicles and charging stations, an increase in public transportation including high-speed rail, and research and development in advanced nuclear power and carbon capture and sequestration systems. 

Conclusion

Natural gas, wind, and solar are now the most common new generation fuels, but it took decades of renewable energy mandates and government spending on renewables research, tax breaks, and other subsidies to help make those resources plentiful and relatively inexpensive. Even so, capacity factors for wind and solar power are half or less than they are for coal, natural gas, or nuclear power, making the amount of generation from wind and solar capacity less than 10 percent of our generation today. For Biden to change the 62 percent of the generation currently from fossil fuels into renewable energy sources will cost far more than he states he will spend on his “clean energy” standard and other goals in the building and transportation sectors and cost American families thousands of dollars needlessly, if it even can be accomplished. 

Serious discussions about energy policy require serious study of the numbers as they are, rather than as you would like them to be. If that is not done, the U.S. economy will never crawl out of the COVID-19 economic crisis it currently faces because it will encounter the headwinds of much steeper electricity bills to pay for this plan.

*This article was originally published by the Institute for Energy Research.

For more information on these issues check out AEA’s Vote Energy 2020 election hub.

Filed Under: Blog Tagged With: , , , , , ,

It’s Time for the Wind Industry to Grow Up

August 6, 2020 by 1 Comment

There comes a point in every person’s life when they have to face the realities of the adult world. In 21st century America the age at which that point comes seems to be extending further past the age of legal adulthood each year, leaving a generation in a state of perpetual adolescence—with their parents footing the bill.

Something similar has taken place concurrently in American energy policy. Birthed in 1992, the Production Tax Credit (PTC) for wind that was intended only to get a young industry up on its feet has now been extended a dozen times. 

The production tax credit provides wind energy facilities with a tax break for the first 10 years of operation. In 2013, the production tax credit for wind generation was 2.3 cents per kilowatt-hour for the first 10 years of production, with adjustments for inflation. Under the phase-out of the credit approved by Congress, the tax credit decreased by 20 percent per year from 2017 through 2019. The Taxpayer Certainty and Disaster Tax Relief Act of 2019 extended the production tax credit for facilities beginning construction during 2020 at a rate of 60 percent—higher than the 40 percent rate for 2019. Currently, wind energy facilities that begin construction after the end of 2020 cannot claim the credit, although they will still be required to be built by state mandates referred to as “renewable portfolio standards.”

No Expansion, No Extension

  • The U.S. Treasury estimates that the Production Tax Credit will cost taxpayers $40.12 billion from 2018 to 2027, making it the most expensive energy subsidy under current tax law.
  • The tax credit fundamentally distorts markets and strains the grid in ways that are economically unsustainable.
  • Backup costs (i.e., the costs of maintaining backup electricity 24/7 to compensate for wind’s intermittency) are not included in estimations of the cost of wind power, leading to gross underestimation of the costs of the energy wind produces.
  • Countries like Germany and Great Britain have bet big on wind power and have foisted higher residential electricity prices on their citizens as a result.
  • If wind power makes sense, the free market will support it without the need for subsidies like the PTC and state renewable energy mandates. 

The Wind Industry Can No Longer Have It Both Ways

The PTC gives wind power producers a path to profitability, even when a fair market would not. It effectively pays wind power producers for energy regardless of that energy’s value to the grid and to energy users. Now nearly 30 years since it was introduced, the PTC continues to coddle an industry that has promised time and again that’s it’s almost ready to move out of the house. Much like America’s perpetual adolescents who pound their chests to assert manhood while awaiting mom-and-dad’s direct deposit, the wind industry assures us it is out-competing other forms of electricity while still lobbying for another round of handouts. 

As described by Kenny Stein for the Institute for Energy Research:

We’ve been hearing a lot lately about the economics of wind energy. In a recent earnings call, James Robo, CEO of NextEra Energy, predicted that within a decade the cost of wind generation would be more competitive “without incentives” than conventional sources like coal and natural gas. NextEra is one of the largest generators of wind and solar electricity.

Tom Kiernan, CEO of the American Wind Energy Association (AWEA), the $18 million lobbying arm of the wind industry, stated in 2016 that “wind is now the cheapest source of new electric generating capacity” in many parts of the United States. Kiernan is also fond of saying that the wind industry is getting out of the federal subsidy business altogether because of a provision in the PATH Act of 2015 that gradually phases down the industry’s main federal subsidy, known as the Production Tax Credit (PTC). In an interview defending the PTC from being modified in the recent tax reform law, Kiernan implied that the industry will no longer be receiving the federal subsidy because “we made a deal to drop our tax credit to zero over five years.” Tom is right, the subsidy phases down, but a closer look at the mechanics of the PTC shows that the wind industry will still be receiving billions in federal subsidies well beyond 2020.

It’s time to close the book on the PTC and nudge the wind industry out into the real world.

Filed Under: Blog, Wind Tagged With: , , , , , , , , ,

Abusing the Process for Politics

August 4, 2020 by Leave a Comment

At the end of June, the Pennsylvania Attorney General announced with great fanfare the result of a statewide grand jury report on the oil and gas industry in the state.  Attorney General Josh Shapiro presented the report as some sort of courageous truth-seeking endeavor.  But in reality, the report is the culmination of a two-year, taxpayer-funded fishing expedition designed to libel the Pennsylvania oil and gas industry, an abuse of the state grand jury process for the transparent purpose of boosting the Attorney General’s green political credentials.  Rather than praised, Shapiro should be condemned.  His abuse of process clearly highlights the way that unscrupulous or self-interested officials can hijack the Pennsylvania statewide grand jury system.  

The statewide grand jury process in Pennsylvania has long been criticized for its serious due process failures.  In most states, grand juries simply have the power to investigate criminal allegations.  In Pennsylvania, however, grand juries have the additional ability to pursue a wide-ranging investigation into any issue deemed vaguely in the public interest.  In such a case the grand jury issues a report that summarizes the findings and recommendations of the grand jury.  Such a report is compiled in secret, directed by prosecutors on their own recognizance, and the report is made public as if it is an official government document, even if the claims contained within it are distorted or completely unfounded.  The targets of such an investigation have no opportunity to respond, as they would in court. The potential for abuse here should be obvious.  Indeed just last year a task force convened by the Pennsylvania Supreme Court recommended ended the practice of grand jury reports.

Even beyond the well-known due process concerns, this report on the state oil and gas industry exposes further deficiencies in the statewide grand jury process.  A grand jury is simply a collection of random individuals.  They are not issue-area experts, not scientists or specialists with the knowledge that helps them understand the issues they are investigating.  The grand jury only knows what the prosecutor chooses to tell them and only hears testimony from those the prosecutor chooses to call.  In the hands of a biased prosecutor, this limitation is easily exploited, as it was in the case of this report.  The grand jurors heard from a parade of individuals claiming various illnesses or land contamination from oil and gas operations, but all purely anecdotal and often unsubstantiated.  A panel with oil and gas expertise would have been aware that claims of health and water issues from hydraulic fracturing have been made for decades and no investigation has substantiated a systematic connection.  For example, even the Obama administration EPA, no friend to the oil and gas industry, found no widespread adverse water impacts from fracturing.  The report is filled with many such factual errors or omissions.

The further deficiency of the grand jury report process is clear from the preposterous nature of the report’s eight recommendations, which again highlight how a group of random citizens are entirely unprepared to conduct specialized investigations.  The first recommendation is requiring drilling setbacks of 2,500 feet or more from occupied buildings.  But an even slightly informed grand jury would know that this “recommendation” is effectively a ban on drilling in the state of Pennsylvania, given that the vast majority of this fairly densely populated state would become off-limits.  Another recommendation calls for the reporting of chemicals used in hydraulic fracturing, but an informed grand jury would have known that this is already required.  The report is so transparently biased that even the state Department of Environmental Protection was moved to draft an extensive criticism of the report’s errors of fact and law.  And this is a DEP that is run by the state’s Democratic governor.

While the random citizens of the grand jury can be excused for their lack of knowledge of law and fact, the Attorney General should not be.  It is clear from the report that AG Shapiro convened this grand jury specifically for the purposes of libeling the oil and gas industry.  The information presented to the grand jurors was one-sided and full of questionable allegations designed to paint the oil and gas industry as evil.  The recommendations included in the grand jury report also just happen to match many of the demands that extreme environmentalist groups promote across the country (for example the setback recommendation mirrored a ballot proposal defeated in Colorado in 2018).  What a coincidence that this “impartial” grand jury reached exactly the conclusions that extreme left-wing activists share.

But of course, it is not a coincidence.  This was a political exercise.  AG Shapiro seeks to use this grand jury report to burnish his green credentials to curry favor with powerful environmentalist groups and billionaires in the hopes of getting their money and support in his pursuit of the governor’s mansion.  Shapiro hijacked this grand jury to boost his career and help with political fundraising.  The state meanwhile is left footing the bill for this fishing expedition and the oil and gas industry has to try to defend itself from the report’s baseless claims in the court of public opinion.

Whatever the theoretical value of a statewide grand jury investigation, this sordid incident exposes the danger of the process in unscrupulous hands.  That the process can so easily be manipulated and used to attack political enemies of the Attorney General should be a blaring alarm demanding reform or outright abolition of this sort of non-criminal report.  In the meantime, this “report” should be seen for what it really is: Attorney General Shapiro’s campaign platform for the governor’s race, and its veracity and factual value discounted accordingly.

Filed Under: Blog Tagged With: , , , , , , , ,
Previous
Next