March 2012

The Environmental Protection Agency on Tuesday, 27th March, released proposed New Source Performance Standards (or NSPS) to limit greenhouse gas emissions from coal and gas fired power plants. The rule will effectively ban the construction of new coal-fired power plants unless they include carbon capture and storage technology that is not commercially available and has poor prospects of ever becoming economically feasible.  This is one of several rules EPA is writing in order to implement their 2009 finding that greenhouse gas emissions endanger public health and welfare and therefore must be regulated under the Clean Air Act.

The proposed new rule does not apply to existing power plants fueled by coal or natural gas or to plants that are under construction or have been permitted.  However, the Clean Air Act’s section 111d requires that existing sources be regulated as well as new sources.

When asked during a press teleconference on Tuesday when rules for existing power plants might be issued, EPA Administrator Lisa Jackson replied, “We have no plans to address existing plants….”  What she should have been asked by reporters was how her agency would respond when environmental pressure groups file suit in federal court to compel the agency to issue NSPS rules for existing power plants.  A good follow-up question would be to ask whether anyone in her agency is talking to environmental pressure groups about filing a friendly suit that EPA could then settle in a friendly way.

Senator James M. Inhofe (R-Okla.) immediately announced that he would do everything he could to block or overturn the rule. The most likely route is to introduce a resolution of disapproval using the Congressional Review Act.  However, that cannot be done until the rule becomes final, which is not likely to happen until next year.

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Post image for Ethanol Still Not Lowering the Real Cost of Gasoline

In the wake of high gasoline prices, the ethanol industry is making the rounds in Washington, and they want you to believe that the Renewable Fuel Standard has lowered gasoline prices by up to $.89 per gallon. This would be remarkable, if it were true. The ethanol industry relies on a study produced by the Center for Agricultural and Rural Development at the University of Iowa. Here is the abstract:

This report updates the findings in Du and Hayes 2009 by extending the data to December 2010 and concludes that over the sample period from January 2000 to December 2010, the growth in ethanol production reduced wholesale gasoline prices by $0.25 per gallon on average. The Midwest region experienced the biggest impact, with a $0.39/gallon reduction, while the East Coast had the smallest impact at $0.16/gallon. Based on the data of 2010 only, the marginal impacts on gasoline prices are found to be substantially higher given the much higher ethanol production and crude oil prices. The average effect increases to $0.89/gallon and the regional impact ranges from $0.58/gallon in the East Coast to $1.37/gallon in the Midwest. In addition, we report on a related analysis that asks what would happen to US gasoline prices if ethanol production came to an immediate halt. Under a very wide range of parameters, the estimated gasoline price increase would be of historic proportions, ranging from 41% to 92%.

If we go to, we see that as of March 29, 2012 the average nationwide price-spread between E85 and E10 is 14.7%, with E85 costing an average of $3.31/gallon and E10 costing an average of $3.89/gallon. Ethanol has less energy content than gasoline, so a direct price comparison is not appropriate. The generally accepted metric is that E85 must be priced about 28% lower than E10 in order to break even, meaning that the cost per mile driven is equal between E85 and E10. [click to continue…]

Obama Kills Coal

by Matt Patterson on March 29, 2012

in Blog

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“If someone wants to build a new coal-fired power plant they can, but it will bankrupt them because they will be charged a huge sum for all the greenhouse gas that’s being emitted.” – Candidate Barack Obama, 2008

Well, we can’t say we weren’t warned.

This week the unelected, unaccountable bureaucrats at the Environmental Protection Agency released a new set of proposed rules designed to lower our greenhouse gas emissions.  If enacted, these rules would virtually destroy the coal industry – just as the President once promised.

Specifically, new power plants will be required to emit no more than 1,000 pounds of carbon dioxide per megawatt hour of electricity; current coal plants emit an average of 1,768 pounds of carbon dioxide per megawatt.  As Jordan Weissmann writes for The Atlantic, “Natural gas plants already meet this requirement. But if a utility wants to burn coal for electricity, it will need to install carbon capture technology — and that’s really expensive.”

Indeed it is, and assuming new coal plants are actually built under this regulatory behemoth, to whom do you think those new expenses will be passed on to?  That’s right – energy consumers.  Rich people will be able to pay those extra costs, though they may gripe about it.  But middle class households will see a rise in their energy bills that will put them in even greater financial distress than they already are under this abysmal “recovery.”

And as for poor and working class people, well, they will be screwed, as is almost always the case when wealthy pencil pushers hatch some brilliant plan to “save the planet.” Pencil pushers like EPA Administrator Lisa Jackson, who crowed, “Today we’re taking a common-sense step to reduce pollution in our air, protect the planet for our children, and move us into a new era of American energy.”

Will coal-power producers try and forge ahead and stay financially viable under these new regulations?  Doubtful.   Remember, this is an industry already groaning under the weight of a slew of new regulations imposed by the Obama EPA, including other emission limits “which would require utilities to eventually upgrade old plants or build entirely new ones,” as Weissmann notes.

OK, so unlike his promises to close the terrorist detainment facility at Guantanamo Bay, keep lobbyists out of the White House, oppose an individual mandate for health insurance, et cetera, ad nauseam, at least we know the President was true to his word when he promised to bankrupt an entire industry that employs many tens of thousands of Americans.

Well done.

Post image for EPA’s “Carbon Pollution” Standard for Power Plants: Four Ways Weird

Yesterday, EPA proposed its first-ever “carbon pollution standard rule” for power plants. The rule would establish a new source performance standard (NSPS) for carbon dioxide (CO2) emissions from fossil-fuel electric generating units (EGUs). The proposed standard is an emission rate of 1,000 lbs CO2 per megawatt hour. About 95% of all natural gas combined cycle (NGCC) power plants already meet the standard (p. 115). No existing coal power plants do. Even today’s most efficient coal plants emit, on average, 1,800 lbs CO2/MWh (p. 134). EPA is effectively banning investment in new coal electric generation.

Like the rest of EPA’s greenhouse agenda, the proposed rule is an affront to the Constitution’s separation of powers. Congress never voted to prohibit the construction of new coal power plants. Indeed, Congress declined to pass less restrictive limits on coal electric generation when Senate leaders pulled the plug on cap-and-trade. Congress should reassert its constitutional authority, overturn the rule, and rein in this rogue agency. [click to continue…]

Post image for EPA Announces the Coal Industry’s Death

“This was the moment,” candidate Obama proclaimed after winning his party’s nomination, “when the rise of the oceans began to slow and our planet began to heal.” When he assumed office, President Obama attempted to act on that promise and regulate greenhouse gas emissions. On June 26, 2009, the House of Representatives passed the American Clean Energy and Security Act (Waxman-Markey Bill). In the words of The New York Times, “The vote was the first time either house of Congress had approved a bill meant to curb the heat-trapping gases scientists have linked to climate change.”

But in June 2010, Senate Majority Leader Harry Reid announced the Senate would not vote on the bill. “We know where we are,” Reid said, “We know that we don’t have the votes.” President Obama’s bid to become the first president to directly limit greenhouse gas emissions failed—he didn’t have the votes, he couldn’t change the law, right? Wrong. On December 7, 2009 (yeah, yeah, “the day that will live in infamy”), the Environmental Protection Agency announced its intention to regulate GHGs anyway, even without a law that “either house of Congress had approved meant to curb” GHGs.

On that day, EPA found that GHGs endanger human health and welfare, and therefore, could be regulated under the Clean Air Act (CAA) of 1972. Sadly for EPA, this regulatory action leads to clearly absurd results. According to the letter of the law, EPA would have to process over 6 million operating permits for stationary sources each year—400 times the current amount. This inconvenient truth didn’t, however, make EPA reconsider whether the CAA was ever intended to regulate GHGs. Rather, EPA decided to simply “tailor” the Act on their own—that is, amend Congressional legislation without Congress’s approval—to target only those environmental “criminals” it wanted.

Today, EPA released its first GHG regulation for coal-fired power plants. As Politico reports, “The standard will generally require that new power plants emit CO2 at a rate no greater than that of a natural-gas-fired power plant. Such plants emit about 60 percent less greenhouse gases than coal plants. The only coal plant to break ground during the Obama administration is a carbon capture and sequestration plant — Southern Co.’s Kemper County plant in Mississippi.” And that’s federally-subsidized.

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…namely, milking the phrase like there’s no tomorrow. To wit, see the results below of a Google search for the terms “Scientific American” and “tipping point”:

Post image for Massachusetts in Danger of Being Markeyed…

Markey [mar-kee] intransitive verb, mar-keyed, mar-keying

  1. To be sold a false bill of goods

Origin:  1976-present; after Rep. Ed Markey (DMassachusetts), ironic rhetorician

On a routine Google News search, I encountered the headline: “Mass. Bill Aims to Ease High Cost of Electricity.” At first glance, this seemed like welcome news. After all, electricity rates in Massachusetts are among the highest in the country.

According to news accounts, however, the method by which State Senate President Therese Murray’s legislation would lower electricity bills is…to make electricity more expensive! Specifically, the legislation would double the amount of costly, intermittent “green” energy that must be provided by utilities serving the State.

I’ve no idea how Sen. Murray will rationalize the discrepancy between her expressed intent (lowering electricity costs) and her preferred means to this end (raising electricity costs). I’ll update this blog when I find out.

Post image for Good Guys Win Big Battle in EPA’s War on Appalachian Coal Production

Last week, property-rights advocates were ecstatic with the Supreme Court’s ruling in Sackett v EPA that citizens subject to EPA Clean Water Act “compliance orders” can have their day in court. Before, EPA had interpreted its power in a Kafkaesque fashion, whereby the Agency could levy fines for alleged Clean Water Act violations without any recourse for the accused. (My colleague Hans Bader wrote an excellent blog on the case here).

Because that high profile case captured all the attention, it was little noticed last Friday when property rights advocates won a similarly consequential victory. That afternoon, United States District Court for the District of Columbia Judge Amy Berman Jackson ruled that EPA overstepped its authority when it vetoed a Clean Water Act permit that had already been issued to the Mingo Logan Coal Company, a subsidiary of Arch Coal, for a mountaintop removal mining project in Logan County, West Virginia. The profound matter at hand was whether EPA could revoke a Clean Water Act permit, after it became the possession of the applicant. Had EPA carried the day, permit (i.e., property) owners nationwide would be subject to the cessation of business, depending on EPA’s whims.

Here’s the background: The Clean Water Act prohibits the discharge of pollution into navigable waters of the United States, unless the polluter has a permit. There are two kinds of permits: (1) Section 402 permits for “point-sources,” which are basically any singular discharge outlet for pollutants (like a pipe); and (2) Section 404 permits for “dredge and fill” activities, like mountaintop removal mining*. The former permits are issued by States after their permitting regimes are approved by EPA. The latter permits are issued by the U.S. Army Corps of Engineers, in accordance with guidance established jointly with EPA. Importantly, the Clean Water Act affords EPA a veto over the U.S. Army Corps of Engineers decision to permit.

The case that was decided last Friday pertained to a Section 404 permit that was issued in late 2009 by the U.S. Army Corps of Engineers to Mingo Logan Coal Company for the Spruce No 1 Mine in Logan County, West Virginia. EPA retroactively vetoed this permit on January 2011. Mingo Logan Coal Company then sued in the U.S. District Court for the District of Columbia. The coal company argued that the Clean Water Act only authorizes EPA to veto a pending Section 404 permit (i.e., while the Army Corps deliberates). EPA countered that the veto power was everlasting. Judge Jackson agreed with the petitioners. She wrote,

“Based upon a consideration of the provision in question, the language and structure of the entire statutory scheme, and the legislative history, the Court concludes that the statute does not give EPA the power to render a permit invalid once it has been issued by the Corps. EPA’s view of its authority is inconsistent with clear provisions in the statute, which deem compliance with a permit to be compliance with the Act, and with the legislative history of section 404.”

Notably, the Court did not rule on EPA’s scientific rationale for the permit veto. If Judge Jackson had ruled that EPA has the authority to retroactively veto a Section 404 permit, next she would have considered whether the veto itself was reasonable. In a 2011 study, I argued at length that the “science” behind EPA’s veto was unacceptably shoddy. In a nutshell, EPA claims that the Spruce No. 1 Mine would significantly harm wildlife up and down the food chain—including fish, salamanders, and birds–while in fact the Agency only presents evidence of harm to a single order of insects (Ephemeroptera, a.k.a. the mayfly). Moreover, the scientific literature suggests that overall insect biodiversity isn’t adversely impacted by surface coal mining in Appalachia. That is, hardier species readily thrive in the wake of the mayfly’s decline.

Judge Jackson’s ruling will no doubt come as a relief to the people of West Virginia. In May 2010, I attended EPA’s public hearing on its proposed veto at the civic center in downtown Charleston. The floor was packed with hundreds of people. Conservatively, I’d estimate that the crowd was 99 percent outraged by EPA’s “jobs for bugs” permit veto. I wrote about that experience here.

This is the second consecutive victory for the Appalachian coal industry over EPA in the U.S. District Court for the District of Columbia. Last October, Judge Reggie Walton ruled that EPA had overstepped its authority when it implemented an extra-layer of oversight over Clean Water Act permitting deliberations by States and the U.S. Army Corps of Engineers for applications from the coal industry in Appalachia.

*Pursuant to the 1977 Surface Mining and Control Act, mountaintop removal mining practitioners must recreate the approximate original contour of the mining area. To put it another way, they have to replace the mountaintop as best they can. However, it is an engineering impossibility to recreate the mountaintop perfectly. There is always leftover dirt and spoil. This “overburden” is deposited at the base of the mountain, becoming a “valley fill.” Invariably, valley fills bury intermittent streams that form in valleys whenever it rains. As such, a valley fill requires a Section 404 dredge and fill permit (because it “fills” intermittent streams).

Obama’s Malaise

by Myron Ebell on March 26, 2012

in Features

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There was a point in the latter half of President Jimmy Carter’s one term in office when he had become so ineffectual and clueless that I found it painfully embarrassing to watch him on television.  Luckily, I lived in England for most of the Carter presidency and didn’t own a television, so I didn’t have to cringe that often during the last year or so he was in office.

I remembered these feelings of embarrassment for our President and our country when I watched clips of President Barack Obama’s speech on energy policy in Cushing Oklahoma on Thursday, 22nd March, and saw the AP photos of the President walking and speaking in front of a large stack of what look to be three-foot diameter pipes used for building oil pipelines.  It seems to me that our President is on the verge of becoming ridiculous and irrelevant in much the same way that Jimmy Carter did in 1979 and 1980.

President Obama keeps repeating the same misleading and inadequate defenses of his energy policies.  The only difference this week compared to the weekly speeches he gave over the past four weeks is that he gave four in one week this week—in Nevada, New Mexico, Oklahoma, and Ohio.  He continues to insist that he has approved new pipelines everywhere.  This is simply false. Those decisions have been made without any involvement by the President.

President Obama also said that the strong bipartisan majorities in the House and the Senate that have voted to permit the 1700-mile Keystone XL Pipeline from Alberta’s oil sands to refineries in Texas and Louisiana “…decided that this might be a fun political issue, decided to try to intervene and make it impossible for us to make an informed decision.”  This is truly pathetic.  The President decided to make it a political issue when he over-rode the recommendations of the State Department and the EPA (after reviewing the application for three years) to permit the pipeline in order to placate his environmental pressure group allies.

The President also discussed in his speech at TransCanada’s pipe yard in Cushing, Oklahoma, TransCanada’s plan to go ahead and build the 485-mile section of the Keystone XL Pipeline from the hub at Cushing to the Gulf.  He then claimed: “And today, I’m directing my administration to cut through the red tape, break through the bureaucratic hurdles, and make this project a priority, to go ahead and get it done.”

The reason that TransCanada has gone ahead with this southern section of the pipeline is because it doesn’t cross an international boundary and therefore doesn’t require approval by the President.  Any red tape and bureaucratic hurdles that may exist within the federal government to building the southern section of the pipeline have been created by the Obama Administration.

President Obama has thus blamed someone else for his decision to block the Keystone XL permit and taken credit for approving a short section of it within the U. S. that is being built without his approval. His words have lost all relation to his deeds.

Chu Has No Clue

by Myron Ebell on March 26, 2012

in Blog

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Energy Secretary Steven Chu has appeared somewhat out of touch with reality since his first day on the job in 2009, but in the past two weeks he has moved entirely into a fantasy world of his own creation.   Earlier this month, the Nobel prize-winning Dr. Chu testified before the House Oversight and Government Affairs Committee and gave himself a grade of A-minus for his first three years as Secretary of Energy.  Last week at another House hearing he gave himself a little higher grade for his handling of gasoline prices.

Secretary Chu told Committee Chairman Rep. Darrell Issa (R-Calif.):  “The tools we have at our disposal are limited, but I would say I would give myself a little higher in that since I became secretary of energy, I’ve been doing everything I can to get long-term solutions.”

In the real world, Secretary Chu and his merry band at the Energy Department have pursued polices designed to raise gasoline and other energy prices.  This is intentional and not the result of their incompetence.  Dr. Chu said in 2008 before President Obama nominated him that gas prices needed to rise gradually to European levels.  That is, seven to ten dollars a gallon, most of which is tax.  One reason for much higher gas taxes is that is the only way to make the alternative fuels and technologies that Secretary Chu has been promoting cheaper than gasoline.

Secretary Chu defended his 2008 statement until two weeks ago, when he grudgingly conceded that it is no longer operative.  Testifying before the Senate Energy and Natural Resources Committee on 13th March, Chu said, “I no longer share that view.  Of course we don’t want the price of gasoline to go up. We want it to go down.”

His locution that he no longer shares that view is odd.  He didn’t share that view; that was his view.

Of course, Secretary Chu may have been implying that he and President Obama share the view that the gas tax would ideally be at least five dollars a gallon.  They both want gas prices to go down now because President Obama wants to be re-elected.