August 2009

Policy Peril Segment 8: Coal (updated 08/26/2009)

by Marlo Lewis on August 18, 2009

Today’s excerpt from CEI’s film, Policy Peril: Why Global Warming Policies Are More Dangerous Than Global Warming Itself, is on the global warming movement’s anti-coal campaign and the dangers it poses to U.S. consumers and the economy. To watch today’s clip, click here. To watch the entire film, click here.

The text of today’s excerpt follows. I provide additional commentary and links to supporting information in the footnotes.

Narrator: First and foremost, they want to ban construction of new coal-fired power plants. [1] Why? Coal is the most carbon-intensive fuel. It releases the most carbon dioxide per unit of energy produced. [2]

More importantly, emissions from new coal plants are expected to swamp, by as much as five to one, all the emission reductions that Europe, Canada, and Japan might achieve under the U.N. global warming treaty, the Kyoto Protocol. Either global warming activists kill coal, or coal will bury Kyoto. [3]

Figure Source: Myron Clayton, New coal plants bury ‘Kyoto,’ Christian Science Monitor, 23 December 2004.

Narrator: To be fair, the activists say they’ll allow new coal generation, if the power plants deploy something called CCS, carbon capture and storage technology. [5] The idea is that instead of releasing CO2 into the air, the power stations would capture it, liquefy it, and then transport it to underground storage sites. [6] There’s just one problem. No commercial coal plants today have CCS technology. [7]

I asked Mary Hutzler, formerly head of analysis at the Energy Information Administration, how long it would take just to determine whether a CCS system would be economical for utilities to build.

Mary Hutzler, former Acting Acting Administrator, Energy Information Administration: It probably requires an immense amount of research and development. People have told me 1o to 15 years alone. [8]

Narrator: Mary also told me that building a national CCS pipeline network could take another decade. Developing the regulations would also take years. [9] So the proposed moratorium is really a ban on new coal plants for 20 years or more.

What’s the risk here? New coal generation is forecast to supply two-thirds of all new electric power over the next two decades. By 2030, new coal generation is expected to provide 15% of all our electricity. [10] So banning it, could create one heck of a power deficit. Frequent blackouts and power failures–an energy crisis would not be an unlikely consequence. At a minimum, our electric bills would go way up.

Narrator: But Al Gore is not content to ban new coal plants. He now proposes to scrap all existing coal plants and natural gas power plants too. He says we must replace all carbon-based electricity with carbon-free electricity in just 10 years–by 2018. [11]

Ben Lieberman (Heritage Foundation): The idea is absolutely off the charts, unrealistic. [12]

Dr. Patrick Michaels (Cato Institute): Al Gore is proposing the literally, physically impossible. [12]

Commentary

[1] James Hansen, the NASA scientist whose congressional testimony during the hot summer of 1988 launched the global warming movement, calls coal power plants ”factories of death“ and “the single greatest threat to civilization and all life on our planet.” The “top priority of any climate policy must be to stop the building of traditional coal plants,” writes climate crusader Joe Romm. He continues: “A climate policy that does not start by achieving at least the first goal, a moratorium on coal without CCS, must be labeled a failure.” “The silver bullet [for global warming] is no more coal,” says Architecture 2030. “Kill Coal. Coal is the enemy of the human race,” declares the Sustainable Development Issues Network. My Google search shows that global warming and coal are discussed on some 4,470,000 Web sites. It’s a safe bet most of those sites share the Gorethodox sentiments quoted above.

[2] Different fossil (carbon-based) fuels emit different amounts of CO2 in relation to the energy they produce. For a variety of fuels, the U.S. Energy Information Administration compares pounds of CO2 emitted per energy output measured in British thermal units (Btu).

Fuel Pounds/Btu

Natural Gas 117

Liquefied petroleum gas 139

Gasoline 156

Coal (bituminous) 205

Coal (subituminous) 213

Coal (lignite) 215

Petroleum coke 225

Coal (anthrocite) 227

From these numbers, we can calculate the emission ratios (or relative CO2 intensity) of the fuels. For example, bituminous coal is 1.37 times more CO2-intensive than gasoline, and 1.75 more CO2-intensive than natural gas.

[3] The Christian Science Monitor chart shown above and in the film clip is based on late 2004 estimates by UDI-Platts, the U.S. Energy Information Administration (EIA), and unspecified industry sources. David Hawkins of the Natural Resources Defense Council (NRDC), in a February 2005 speech, presented a similar bottom line, based on International Energy Agency (IEA) data. He said:

The International Energy Agency (IEA) forecasts that 1400 GW of new coal plants will be built worldwide in the next 25 years alone. To put that in context, current U.S. coal capacity is about 330 GW and global capacity is 1000 GW. This enormous increase in coal capacity will lock us into a huge additional commitment to global warming unless we use technologies that reduce CO2 emissions to minimal levels; marginal efficiency improvements will not prevent this lock-in.

The lifetime emissions from just this next wave of coal investment will be about 580 billion tons of CO2. That amount is more than half the total loading of the atmosphere with CO2 from all forms of fossil fuel combustion in the past 250 years!

Build scores or hundreds of new coal plants, and the Kyoto CO2 reductions barely amount to a drop in the bucket. As has been widely reported, China is building coal power plants at the rate of one a week.

[5] A wide-ranging coalition of environmental groups called “Coal Moratorium Now“ demands that no new coal-fired power station be built unless it is equipped with carbon capture and storage. In 2008, Reps. Henry Waxman (D-CA) and Ed Markey (D-MA)–the authors of the 2009 Waxman-Markey cap-and-trade bill (H.R. 2454, the American Clean Energy and Security Act)–introduced legislation (H.R. 5575) to impose a moratorium on new coal plants lacking CCS. In March 2009, state legislators introduced a similar bill in Texas. In April 2009, the UK Government proposed regulations requiring new coal plants to install CCS on at least 400 MW of output–about 25% of the output of an average power station. In addition, the power stations would have to capture 100% of their emissions by 2025–if the applicable technology exists by then. That’s a big “if.”

[6] A wealth of both basic and technical information on CCS is available in studies by MIT, the U.S. Government Accounting Office, the Electric Power Research Institute (EPRI), the Congressional Research Service, the Department of Energy (DOE), and Glaser et al. (2008).

[7] Oil companies sometimes inject CO2 into wells to squeeze more petroleum out of them–a technique called enhanced oil recovery (OER). Sometimes people talk as if a CCS system could piggy-back on EOR projects. But, as MIT’s Future of Coal report points out, CO2 injection for EOR has “limited significance for long-term, large-scale CO2 sequestration–regulations differ, the capacity of EOR projects is inadequate for large-scale deployment, the geologic formation has been disrupted by production, and EOR projects are usually not well instrumented [monitored for CO2 leakage; p. xiii].”

The Department of Energy (DOE), citing rising costs, pulled the plug on FutureGen, a $1.5 billion government-industry partnership to build the world’s first commercial scale CCS power plant. In July 2009, however, FutureGen Alliance, Inc. announced it had reached an agreement with DOE to begin “construction of the first commercial-scale, fully integrated carbon capture and sequestration project in the country in Matton, Ill.” So there is still not even a commercial-scale demonstration project, though there may be in the next few years.

[8] MIT’s March 2007 Future of Coal report calls for large demonstration projects in 3-4 sites in different regions of the country costing “$500 million over eight years.” Better still, MIT argues, “Five large tests could be planned an executed for under $1 billion, and address the chief concerns for roughly 70% of U.S. [coal generation] capacity. Information from these projects would validate the commercial scalability of geologic carbon storage and provide a basis for regulatory, legal, and financial decisions needed to ensure safe, reliable, economic sequestration” (p. 54).

EPRI’s Bryan Hannegan estimated in March 2007 that CO2 capture (including compression, transportation, and storage) would increase the levelized cost of an Integrated Gassification Combined Cycle (IGCC) coal power plant by ”about 40-50%” (p. 5). IGCC is already more costly than the more common pulverized coal (PC) power plants. EPRI is confident that additional RD&D will lower carbon capture costs. But by how much and how soon is uncertain.

A February 2009 Stanford University study, citing a September 2008 McKinsey & Co. study and other sources, says that CCS is projected to increase the capital costs of new coal power plants by almost 50%. “On the basis of avoided emissions, the cost of CCS ranges from $30-$90/ tonne CO2, which translates into a 60-80% increase in the levelized cost of electricity ($/MWh).”

A July 2009 Harvard University study estimates that early adopters of carbon capture technology will incur a cost of $100-$150/ton of CO2 avoided (equivalent to 8-12 cents/kWh). Once the technology matures, the additional cost will fall to $35-$50/ton of CO2 avoided (equivalent to 2-5 cents/kWh), the researchers estimate. For comparison, in 2009, residential electric rates were 20.9 cents/kWh in Connecticut, 9.2 cents/kWh in Kansas, and 14.6 cents/kWh in California.

How long between early adoption and technological maturity? According to the researchers, increasing scale, learning by doing, and technological innovation “are expected to reduce abatement [CO2 capture] costs by approximately 65% by 2030, although such estimates are inevitably uncertain” (emphasis added).

In plain speak, it may take many years to sort out the economics of CCS.

[9] The scale of the network of pipelines and storage sites required to transport and bury CO2 from U.S. coal power plants is staggering. According to MIT’s Future of Coal report (p. ix):

The United States produces about 1.5 billion tons per year of CO2 from coal-burning power plants.

If all of this is CO2 is transported for sequestration, the quantity is equivalent to three times the weight and, under typical operating conditions, one-third the annual volume of natural gas transported by the U.S. gas pipeline system.

If 60% of the CO2 produced from U.S. coal-based power generation were to be captured and compressed into a liquid for geologic sequestration, its volume would about equal the total U.S. oil consumption of 20 million barrels per day.

At present the largest sequestration project is injecting one millions tons/year of carbon dioxide (CO2) from the Sleipner gas field into a saline aquifer under the North Sea.

Even if Congress approves such a system, and major environmental groups support it, NIMBY (”not in my backyard”) protests and litigation could block or delay implementation for many years. Some people just don’t like energy projects, regardless of how “green” the projects purport to be. For the gory details, check out the U.S. Chamber of Commerce’s ”Project No Project“ Web site.

[10] Two-thirds of all new generation and 15% of total U.S. electric supply–these estimates came from the Energy Information Administration’s (EIA) 2008 Annual Energy Outlook. See the figure below.

Coal’s estimated share of new generation and total generation are lower in EIA’s Annual Energy Outlook 2009. EIA forecasts that from 2007 to 2030, new coal generation will provide 64% of all new generation and 9% of total U.S. electric supply. See the figure below.

Actually, it’s remarkable that EIA still forecasts a robust increase in electric generation from coal. Coal increasingly operates in a politically hostile, litigious environment. The Sierra Club, for example, claims that its activists, lawyers, and allies, working with state and local leaders, have prevented 100 planned coal power plants from being built over the past eight years. Click here for a partial list.

For example, even in Texas, an energy-producing state, environmental activists stopped TXU Corp. from building eight of 11 planned new coal power plants, despite estimates by the Perryman Group that investment in the new plants, over five years, would add $25.8 billion to state GDP, $17.3 billion to in-state personal income, and 389,000-plus person-years of employment.

[11] I’m not making this up. The text and video of Gore’s speech calling for carbon-free electricity by 2018 are available here.

[12] According to the EIA, in 2008, renewable sources generated 356 billion kWh, of which 259.7 billion kWh, or 73%, came from conventional hydro-electric dams. Total net generation by the electric power sector was 3852 billion kWh. So renewables provided only 9% of total generation, which means that only about 2.4% came from the politically-correct renewables–wind, biomass, solar, and geothermal.

Note that non-hydro renewable sources would provide even less electricity but for a plethora of market-rigging federal and state tax breaks and subsidies and Soviet-style production quotas known as renewable portfolio standards.

Coal and natural gas provided 2654 billion kWh, or about 69% of total U.S. electric generation in 2008. Gore and his allies would undoubtedly oppose the construction of new large hydroelectric dams even if suitable sites were available. So what Gore and “We Can Solve It” are proposing to do, is replace the 69% of our electricity that comes from coal and natural gas with the non-hydro renewables that currently supply only 2.4%–all in 10 years.

This plan would fail–dismally. Our electricity rates would skyrocket, because the demand for renewable electricity, ramped up by mandates, would vastly exceed supply. No transition that big and that fast would be smooth. Service disruptions and blackouts would likely be frequent and perversive–a chronic energy crisis.

Gore’s plan would also set a world record for government waste, since hundreds of profitable coal and natural gas power plants would have to be decommissioned long before the end of their useful lives.

To read previous posts in this series, click on the links below:

A Not-So-Surprising “Clunklusion”

by Marc Scribner on August 18, 2009

CEI Editorial Director Ivan Osorio discussed the true economic costs of the Obama administration’s “Cash for Clunkers” program, calling it “a costly boondoggle that will yield little net benefit.” It is pretty clear that Cash for Clunkers will prove harmful to the long-run economy, but what about the program’s other purported purpose–reducing CO2 emissions? Below are a couple of interesting quotes.

President Barack Obama, July 31, 2009:

The [Cash for Clunkers] program has proven to be a successful part of our economic recovery and will help lessen our dangerous dependence on foreign oil, while reducing greenhouse gas emissions and improving the quality of the air we breathe.

Professor Christopher R. Knittel, University of California, Davis, Department of Economics, “The Implied Cost of Carbon Dioxide under the Cash for Clunkers Program,” August 14, 2009:

I calculate the implied cost of greenhouse gas emission reductions [under the Cash for Clunkers program] and find that they exceed those estimates from the Waxman-Markey bill by nearly tenfold.

Even from a pro-cap-and-trade, global warming alarmist perspective, the Cash for Clunkers program is an abysmal failure.

Hurricane Activity Increase Due to Better Monitoring

by Ivan Osorio on August 17, 2009

The potential threat from more frequent and stronger hurricanes is a favorite scare scenario of climate alarmists. They point to disasters like Hurricane Katrina as examples. However, such anecdotal evidence, while dramatic, says little about overall cyclonic activity. A greater document of documented storms does not necessarily mean that more storms have occurred, only that more have been recorded. As Gabriel Vecchi and Thomas Knutson of NOAA state:

Two recent papers (Vecchi and Knutson; and Landsea et al) suggest that, based on careful examination of the Atlantic tropical storm database (HURDAT) and on estimates of how many storms were likely missed in the past, it is likely that the increase in Atlantic tropical storm frequency in HURDAT since the late-1800s is primarily due to improved monitoring.

Vecchi and Knutson find this increase among moderate-duration storms (storms lasting longer than two days). Their adjustment for “missing” storms is shown in the chart above . They go on:

Existing records of past Atlantic tropical storm numbers (1878 to present) in fact do show a pronounced upward trend, correlated with rising SSTs (see Figs. 1 and 9 of Vecchi and Knutson 2008). However, the density of reporting ship traffic over the Atlantic was relatively sparse during the early decades of this record, such that if storms from the modern era (post 1965) had hypothetically occurred during those earlier decades, a substantial number would likely not have been directly observed by the ship-based “observing network of opportunity.” We find that, after adjusting for such an estimated number of missing storms, there is a small nominally positive upward trend in tropical storm occurrence from 1878-2006. But statistical tests reveal that this trend is so small, relative to the variability in the series, that it is not significantly distinguishable from zero (Figure 2). Thus the historical tropical storm count record does not provide compelling evidence for a greenhouse warming induced long-term increase.

As for greater economic losses from storms, there are simply more people living on the coasts than ever before, which means more buildings along the coasts than ever before.

For more on hurricanes, see the segment and comments on the topic from Marlo Lewis’s film, Policy Peril. (Thanks to Margaret Griffis for the tip.)

Don’t Forget Cap and Trade!

by Iain Murray on August 14, 2009

Even though 4 Democratic Senators are so nervous about the electricity tax called cap-and-trade they are urging their leadership to drop it from the global warming bill, no-one should count on that happening yet. More Senators need to wake up to the significant problems cap-and-trade has, and there is no better example of those than the European version of the scheme. With that in mind, my colleague Roger Abbott and I have written a piece for the American Spectator today that outlines just two of the problems the Europeans have encountered. We conclude:

To sum up, the failure of the European ETS should give pause to Senators considering a similar system for the U.S. Cap-and-trade will not result in emissions cuts. It will, however, greatly enhance the power of the government to regulate the economy. And it will lead to higher energy costs, as the costs of trading permits add to utilities’ cost of doing business.

Given these facts, why the strong push for cap-and-trade? The sad fact is that both President Obama and the Democratic Congress are misleading the public. Alternative measures such as a carbon tax have not been considered precisely because their costs are transparent and obvious to the public. By contrast, cap-and-trade allows the President and Congress to claim credit for “taking action” on global warming without acknowledging the real costs that entails — costs which the public, when informed of the facts, is rightly unwilling to accept.

Feel free to send a copy of our piece to your Senator!

Senate Blocks Cap-and-Tax Energy Rationing in Australia

by William Yeatman on August 13, 2009

Yesterday the Australian Senate defeated cap-and-trade energy rationing legislation, by a 42-30 vote. Let’s hope the U.S. Senate acts similarly this Fall, and votes down the global warming energy tax that passed through the House of Representatives in late June, before anyone had the time to read it.

Under Australia’s parliamentary system of government, the Senate is largely a rubber stamp body, but it does have the power to bloc legislation.

Prime Minister Kevin Rudd can choose to re-submit the failed cap-and-tax legislation in three months. If, however, the Senate blocks it again, the Australian constitution calls for the dissolution of the government and immediate elections (a 10-12 week process), after which the entire Parliament must meet to consider the legislation.

Vulnerability When It Suits the Enviros

by Paul Chesser, Heartland Institute Correspondent on August 12, 2009

We all know CNN Sucks for a lot of reasons, and this morning revealed another. The top story on the Web site for a few hours highlighted the Natural Resources Defense Council’s “oil vulnerability” index, which ranks states by how much their citizens are harmed by gasoline prices. From the article that is supposed to be objective journalism:

The annual index compiled by the National Resources Defense Council measures the effect of oil and gas price increases on people’s incomes. The survey also ranks the states that are doing the most to promote alternative energy sources.

The council’s “Fighting Oil Addiction: Ranking States Oil Vulnerability and Solutions For Change” survey finds, for the third year in a row, that Mississippi tops the list as the most vulnerable state when it comes to a spike in gas prices. The study ranks states based on a simple income-to-gas-price ratio — how much a family makes compared with what they’re spending on fuel every year.

“This is very relevant right now. We’ve seen, in spite of the economy being down, prices rebounding because of the summer driving season,” according to Deron Lovaas, the council’s transportation policy director.

I don’t believe in euthanasia of the brain dead, but they should not be reporting either. How brilliant that NRDC should come up with the poorest state (or close to it) in the nation as most affected by gas prices by comparing average incomes to fuel expenses. Next thing you know the Dairy Substitute Association (okay, I’m making that up) will reveal that — omigosh — Mississippians were hardest hit by rising milk prices last year and that alternatives must be researched, developed and subsidized! And what a great idea NRDC has come up with for every other advocacy organization in existence — create bogus studies that show the greatest harm is done to the poorest states by the products and activities you hate!

And even better, if you are on the leftist/environmentalist side of said issue, CNN Sucks will highlight it on the top of their homepage and your group can add millions of more dollars in financial support. Meanwhile:

Energy analyst Bill White, with the environmental consulting firm Gardiner and Associates, was part of the “Fighting Oil Addiction” study.

“We are measuring vulnerability, and people who spend a higher share of their income on gasoline are more vulnerable to rising gas prices. We’re concerned with working folks and their vulnerability to this. If they don’t have alternatives and the policies aren’t moving in directions to provide them with alternatives, they will continue to be vulnerable,” White said.

Yes, and the environmental extremists want to force their expensive “alternatives” on the poor with electricity as well, such as wind and solar power. Funny it doesn’t matter to groups like NRDC how “vulnerable” Mississippians are with those policy prescriptions they advocate.

UN Chief Needs a Reality Check on Climate Change

by William Yeatman on August 12, 2009

Today the Associated Press reports that United Nations Secretary-General Ban ki Moon told a gathering of UN bureaucrats in Korea that climate change “is, simply, the greatest collective challenge we face as a human family.”

Really?

After all, there are wars raging is Asia. Disease kills thousands of human beings every day in Africa. A third of the world’s population is mired in crushing poverty. These are big challenges that are harming the human family now.

Climate change, however, seems to be on hold. Despite steadily increasing atmospheric concentrations of greenhouse gases, global temperatures haven’t increased statistically since 1995.

So…the head of the United Nations thinks that non-existent warming is a more pressing threat to mankind than war, disease and poverty. Talk about misplaced priorities!

Smart Is As Smart Does

by Iain Murray on August 12, 2009

This picture accompanying this post is doing the rounds on the internet. The commentary normally reads:

Below is a photo of a wreck in Jefferson Parish, LA (near New Orleans ) between two
trucks and a Smart Car. Think Il (sic) pass on the Smart Car.

As with any email circular, especially ones with egregious spelling errors, you should always take it with a pinch of salt. The goldmine that is snopes.com says the following:

According to a reader who relayed information to us from the Jefferson Parish Sherriff’s Office, the accident pictured above involved a Ford Escape not (as is commonly reported) a Smart Car. The impact did not occure dead center as apparently shown in the photograph; it was offset to the right, and thus the driver’s side was not nearly as heavily damaged. the driver of the Ford survived the crash and has since been released from the hospital.

So does this mean that a Smart car is safe and you should be happy if your son or daughter wanted to drive one? Up to a point:

Ouch.

Perry’s Petition and Governors Associations

by Paul Chesser, Heartland Institute Correspondent on August 11, 2009

The campaign for Texas Gov. Rick Perry (who faces a Republican primary challenge in 2010 from Sen. Kay Bailey Hutchison) has posted on his Web site a petition against cap-and-trade legislation:

We, the undersigned, ask that Congress abandon legislation that will immediately lead to higher taxes, higher unemployment, tremendous burdens on businesses, and higher costs of goods. We believe policies like this should not be pursued as a response to inconclusive climate change theories.

As America experiences a period of economic downturn, we cannot afford the largest tax increase in our country’s history. By some estimates, the legislation known as “Cap and Trade” will result in a shocking $6,800 yearly increase in costs for a family of 4 in just a few short years. Families will see higher utility bills, loss of jobs, businesses closing, and higher prices on American products.

Texans are certainly qualified to speak out on this issue. Texas’ energy industry fuels the nation, supplying 20 percent of the nation’s oil production, one-fourth of the nation’s natural gas production, a quarter of the nation’s refining capacity, and nearly 60 percent of the nation’s chemical manufacturing. The Texas energy industry employs nearly 375,000 Texans with $35 billion in total wages.

Here’s what else Gov. Perry is in a position to do, if he is serious about resistance to cap-and-trade:

1. Demand that during next week’s annual meeting of the Southern Governors Association, that both scientific and economic balance be represented on the panels that will address the global warming issue. With the Western Climate Initiative, the Midwestern Greenhouse Gas Reduction Accord, and the Regional Greenhouse Gas Initiative, the South is the last unconquered frontier for climate alarmists in pursuit of regional cap-and-trade.

Judging by SGA’s agenda, it is clear that they have the same goal with panels that have the following titles: “Climate Change, Energy and National Security” (speakers are former Virginia Sen. John Warner and Maj. Gen. Richard L. Engel, director of climate change and state stability program in the Office of the Director of National Intelligence), “Evaluating State-based Climate and Energy Policies” (speakers are Tom Peterson, president, and Adam Rose, economist, for the alarmist/activist Center for Climate Strategies), “Developing a Smart Electricity Grid” (a bunch of speakers with economic interests in “greening up” the power delivery system and getting government subsidies to do so), and “Balancing Energy Demands with Climate Goals” (more green energy rent-seekers). Oh, and there’s a panel on health care.

If that doesn’t scream that the Greens have overtaken the SGA (as they have with the other regional governors associations), I don’t know what else does. Perry should say something about it. This will be a one-sided affair otherwise.

2. Demand an independent audit of the Western Climate Initiative, as its been managed and funded under the leadership of the Western Governors Association. Something is fishy when WGA has an entire Web page dedicated to the climate change issue yet it fails to mention it runs WCI. In fact, considering the degree that environmental extremists fund and manage WGA, the group needs a thorough rectal exam. Perry could initiate that idea with his Western colleagues.

Petitions are nice, but the massive fraud behind the science of global warming and behind the rosy economics on cap-and-trade demand a more vocal advocate for electricity ratepayers and gasoline consumers. The governor of a large influential state would be helpful. Otherwise costly policy crap like what SGA and WCI are pushing will progress along and we’ll get stuck with it.

Policy Peril Segment 7: Fuel economy standards

by Marlo Lewis on August 11, 2009

Today’s excerpt from CEI’s film, Policy Peril: Why Global Warming Policies Are More Dangerous Than Global Warming Itself, is on two global warming policies Congress has adopted: fuel economy standards and biofuel mandates.

Here are my previous posts in this series:

To watch today’s film excerpt, click here. To watch the entire film, click here.

The text of today’s film clip immediately follows. It includes footnotes to additional commentary and supporting information.

Narrator: If stopping new coal is the global warming movement’s top priority, a close second is jump-starting a ‘beyond petroleum’ transport system. They propose to do this by tightening new-car fuel economy standards. Why?

A car that gets more miles to the gallon emits less CO2 per mile [1]. But the federal fuel economy program, also known as CAFE, has serious downsides.

Sam Kazman (General Counsel, Competitive Enterprise Institute): Now there are lots of problems with fuel economy mandates. One thing, they raise new car prices. [2] Secondly, they restrict consumer choice. [3] But the worst thing is an effect you never hear their advocates talking about. Namely, fuel economy mandates kill people. [4]

Narrator: Here’s why. Heavier cars provide more mass to absorb collision forces, and bigger cars provide more space between the occupant and the point of impact. [5] Make a car smaller and lighter, and it will go farther on a gallon of gas.

Kazman: But you also make it less safe. According to the National Academy of Sciences, the current CAFE standard by downsizing cars, contributes to about 2,000 fatalities per year. [6]

Narrator: Legislation Congress passed in December 2007 requires a 40% increase in fuel economy by 2020. [7] In 2007, only two out 1,153 vehicle models met the new standards. [8] So expect more downsizing in the years ahead.

Another ‘beyond petroleum’ policy is to require the sale of alternative fuels. In December 2007 Congress also mandated that motor fuel producers sell 36 billion gallons of ethanol a year by 2022, with 15 billion gallons coming from corn kernals. [9] The result, we’re diverting massive quantities of grain from food to auto fuel. This contributes to the surge in global grain prices that is pushing millions of the world’s poorest people to the brink of starvation. [10]

But at least ethanol cuts down on CO2 emissions, right? Actually, no.

Dr. Dennis Avery (Hudson Institute): As we expand the cropland, then we get into the real trouble, because we release the greenhouse gas that’s stored in the soil as carbon. And with corn, we release twice as much gas as we would have released if we burned gasoline in the first place. [11]

[1] A gallon of gasoline (which weighs about 6.3 lbs.) produces 20 lbs. of CO2 when burned. If a car gets more miles to the gallon, it will emit fewer lbs. of CO2 per mile driven. The relationship between fuel economy (mpg) and lbs. CO2/mile is so strict that EPA bases its fuel economy ratings of vehicle models on tests that measure the carbon content of the emissions, principally CO2.

Unsurprisingly, virtually all CO2-reduction options for new motor vehicles are fuel-economy-increasing options. See p. 10 of the National Automobile Dealer Association’s comment on EPA’s reconsideration of California’s request for a waiver to establish greenhouse gas emission standards for new motor vehicles.

[2] There are basically two ways to increase fuel economy–downsizing (making cars smaller and lighter) and new technology. Typically, advanced technology costs more than conventional technology. The Energy Information Administration, for example, estimates that California’s greenhouse gas/fuel economy standards, which President Obama recently adopted, will increase the average price of a new car by $1,860 in 2016. [Obama’s program will also impose heavy burdens on the nearly prostrate U.S. auto industry, as economist Keith Hennessey explains.]

[3] The CAFE program all but killed the market for large station wagons, because automakers could not produce millions of these once popular “family cars” and meet the CAFE standard for their vehicle fleets.

In addition, as a general matter, because fuel economy mandates increase vehicle cost, they inevitably price some consumers out of the market for certain vehicle models, restricting their choices.

Ironically, the federal fuel economy program boost the production and sale of gas-guzzling SUVs. Consumers who might otherwise have purchased big station wagons instead bought large SUVs. Congress regulated SUV fuel economy less stringently because (1) SUVs are built on a light-truck chassis and thus are classified as trucks rather than as passenger cars, and (2) most SUVs traditionally were used for farming and business rather than commuting. Fuel economy standards helped create the boom market for low-mpg SUVs–a classic case of the law of unintended consequences.

[4] Sam debates the issue of whether CAFE kills with an analyst from Natural Resources Defense Council (NRDC) here.

[5] I am always amazed when people with scientific credentials deny the safey implications of regulatory-induced vehicle downsizing. How can they claim that size and weight don’t matter? That’s denying the laws of physics. There’s a reason why boxing matches don’t pit lightweights against heavyweights, or why marathon runners don’t play professional football.

Yes, new technology can improve the crashworthiness of small cars. But, as Sam explains elsewhere, a large car with new technology will still be safer than a small car with new technology. To the extent that CAFE constrains the production and sale of larger, heavier vehicles, it limits auto safety.

[6] Sam refers to a National Academy of Sciences/National Research Council (NRC) study, Effectiveness and Impact of Corporate Average Fuel Economy (CAFE) Standards. See pp. 25-29, especially p. 27. The NRC estimates that in 1993, a typical year, downweighting and downsizing of cars contributed to 1,300 to 2,600 auto fatalities, 13,000 to 26,000 incapacitating injuries, and 97,000 to 195,000 total injuries.

[7] The so-called Energy Independence and Security Act (EISA). Click here to read the Congressional Research Service’s summary of the EISA provisions.

[8] Prior to investigating, I had assumed there must be at least 30-50 models on the road that met the fuel economy standards mandated by the 2007 Energy Independence and Security Act. But EPA’s fuel economy ratings for model year 2008 reveals that only two out of 1,153 models, the Toyota Prius and Honda Civic Hybrid, met or exceeded the standard (35 mpg for both city and highway driving conditions).

[9] Click here to read the Congressional Research Service’s summary of the EISA provisions.

[10] I provide references here on biofuel policy and world hunger. In May 2008, the International Food Policy Research Institute estimated that biofuel demand accounted for 30% of the increase in world cereal prices during 2007-2008. For further discussion, see Dennis Avery’s October 2008 paper for the Competitive Enterprise Institute.

[11] Dennis’s CEI paper recaps the literature on CO2 increases from biofuel policy-induced land-use changes, including Searchinger et. al. (2008) and Fargione et al. (2008). Additional reviews of these studies are available on World Climate Report and CO2Science.Org.

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