October 2012

Post image for Yes, Coal Is Dying, and Yes, EPA Is the Main Culprit

Yesterday at Grist, David Roberts posted about a recent Christian Science Monitor article titled, “Study: EPA Regulations Squelch U.S. Coal Industry,” which he labeled “misleading dreck.” According to Roberts,

The story, from “guest blogger” Charles Kennedy, refers to a report [PDF] from the research consultancy Brattle Group. So I went and read the report. And it doesn’t say what Kennedy says it says. At all. In fact, it says something close to the opposite….

The report is an update of its brief from late 2010 on potential coal-plant retirements. The headline news: Brattle is substantially upping its projection of how many coal plants will retire, by about 25 GW. That’s huge. But it’s not happening because of EPA regulations. In fact, say the authors, the change is “primarily due to changing market conditions, not environmental rule revisions, which have trended towards more lenient requirements and schedules” (his emphasis).

Roberts is plainly confused when he writes that “it’s not happening because of EPA regulations.” The entire point of the Brattle Group’s 2010 and 2012 analyses is to forecast how the electricity market will respond to scores of billions of dollars in capital costs being imposed by the EPA on the coal industry. Thus, in a 2010 study, the Brattle Group concluded that 50 GW to 67 GW of coal-fired electricity would retire rather than install EPA-mandated retrofits, given 2010  market conditions (i.e., electricity demand and natural gas prices). And in a 2012 update of the 2010 report, the Brattle Group concluded that 59 GW to 77 GW of coal-fired electricity would retire rather than install EPA-mandated retrofits, given current market conditions (i.e., electricity demand and natural gas prices).

In each analysis, the direct impetus for the retirement of coal units is the cost of retrofits required by EPA regulations. And the cheaper the price of natural gas, the more utilities will opt to fuel switch or participate in the wholesale market, rather than pay for retrofits at their coal-fired power plants. This is why the updated 2012 Brattle Group report estimated a 25 GW increase in coal power plant retirements over the 2010 report–because gas prices are still depressed, so it is more economical for utilities to switch fuels than it is for them to comply with EPA requirements. Roberts, however, implies that utilities would choose to shutter coal power plants based on the price of natural gas alone; he fails to acknowledge that EPA regulations remain the underlying cause of the utilities’ choice to do so.

Given that the price of coal is projected to be significantly cheaper than the price of gas—as it states on page 2 of the 2012 Brattle Group report—it is likely that most, if not all, of these coal-fired power plants would continue operating, were their owners not forced to spend hundreds of millions, even billions of dollars, on EPA-mandated retrofits. To put it another way, natural gas can beat coal, but only with EPA’s help. For similar reasons, Chesapeake Energy (a natural gas company) gave $25 million to Sierra Club’s “Beyond Coal” campaign. Because a war on coal is great for gas!

Now, it would be one thing if these retrofits actually served a public health purpose. Alas, they don’t, which was the subject of a previous post. Instead, EPA is targeting the coal industry with costly, nonsensical regulations for no discernible reason other than to placate the environmentalist wing of the President’s political party. Of course, this is crummy policy making, especially in the midst of a difficult economy.

Post image for Why Can’t We Get All Our Electricity from Wind?

Wind energy advocates often point out that a State, the U.S., or the entire world has enough wind energy to supply all of its electricity needs many times over. Writing in Scientific American, for example, Mark Jacobson and Mark Delucchi note that the world in 2030 is projected to consume 16.9 trillion watts (terawatts, or TW) of power, with about 2.8 TW consumed in the U.S. Total wind flows worldwide generate about 1,700 TW, and accessible wind resources total an estimated 40-85 TW. 

Based on such math, the American Wind Energy Association (AWEA) argues, for instance, that Arizona has enough wind to meet 40% of its electricity needs, Michigan wind resources could meet 160% of the State’s electricity needs, and wind in Oklahoma could provide nearly 31 times the State’s electricity needs. Yet despite ratepayer subsidies, special tax breaks, and renewable energy mandates and goals in 37 States, wind supplied 2.2% of total U.S. electric generation in 2010. Why don’t we get lots more of our electricity from this ‘free,’ ‘non-polluting’ ‘renewable’ source?

The chief impediments are wind energy’s inherent drawbacks. First, wind energy is intermittent — at any given time the wind may blow too hard or too soft or not blow at all. Second, wind is non-dispatchable. When Shakespeare’s Owen Glendower boasted, “I can call spirits from the vasty deep,” Henry Hotspur replied: “Why, so can I, or so can any man; but will they come when you do call for them?” Like Glendower’s spirits, the winds answer to no man. The wind is not ours to ‘dispatch’ as electricity demand rises or falls. 

There are three main ways of compensating for wind’s intermittency and non-dispatchability — pumped storage (pump water uphill when there’s too much wind relative to demand; let it run downhill and drive turbines when there’s too little wind), natural gas backup generation, and wind dumping (idle the turbines when demand is low). Incorporating those techniques to keep supply in balance with demand adds to the cost of wind electricity, which is typically more costly than coal- and gas-generated electricity even without storage and backup.

What’s more, according to a new Reason Foundation/Independence Institute report, the storage, backup, and idling costs become prohibitive as wind’s share of total generation increases beyond 10-20%. [click to continue…]

Post image for House Conservatives Draw a Line on Wind Tax Credit

Forty-seven Republican Members of the House of Representatives sent a joint letter to Speaker John Boehner (R-Ohio) this week announcing that they oppose including a provision to renew the wind production tax credit for another year in any broader legislation.  The letter concludes, “We believe that the Solyndra scandal has demonstrated that it is time for the federal government to stop picking winners and losers in the energy marketplace.  Twenty years of subsidizing wind is more than enough.  Our nation can simply no longer afford to pick winners and losers in the energy marketplace.  The PTC should expire at the end of the year under current law.”

Wind installations completed before the credit expires at the end of this year will still receive the 2.2 cents per kilowatt hour subsidy for ten years.  The one-year extension voted out by the Senate Finance Committee in early August would actually expand the program by allowing wind investors to claim an immediate 30% investment credit instead of having to wait ten years for a full payout and by allowing projects started (but not finished) next year to qualify.  The Congressional Budget Office estimates that the Senate version will cost $12 billion over ten years.

The joint letter was organized by freshman Representative Mike Pompeo (R-Ks.), who has led the effort against all energy subsidies and mandates in this Congress, including the T. Boone Pickens Payoff Plan to subsidize natural gas trucks and filling stations.  Crony capitalists have hit back with numerous ads attacking him in his Wichita-centered district.

Support for the wind and solar tax credits is pretty uniform among Democratic Members of Congress.  Among Republicans, it tends to split along State lines.  Republican Members representing the 29 States with renewable portfolio standards (RPS) for electric utilities tend to support the tax credits because the subsidies lower the cost of renewable electricity.  Republican Members representing States without renewable requirements generally oppose the credits because taxpayers from their States are subsidizing the use of renewable energy in other States.  Here’s a map that shows the various state renewable requirements.

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Post image for Are Americans Really Willing to Pay More for Fuel-Efficient Cars?

A recent survey conducted by market research firm Penn Schoen for Ford Motor is being spun by the mainstream media to say that Americans are now more willing to pay more for a fuel-efficient vehicle. The survey really shows that only 25 percent of those surveyed would be willing to spend just $1000 more upfront on a hybrid car that would save money down the road through lower fuel costs. Consumer resistance to higher auto prices is the driver behind the Obama administration’s push to raise Corporate Average Fuel Economy (CAFE) higher and higher.  The new CAFE standard is 54.5 miles per gallon by 2025.

The National Automobile Dealers Association estimates that these new CAFE standards will lead to an average price increase of $3,000 per vehicle, which is $2,000 more than the survey shows that just  a quarter of Americans would be willing to spend. Ah, but the Environmental Protection Agency responds that this just shows that regulators know what’s better for consumers than consumers do.  Higher CAFE standards will force consumers to spend more on new cars that will eventually save them lots of money on gasoline.

NADA Chairman Bill Underriner doesn’t agree with EPA’s argument for higher fuel efficiency standards: “This increase shuts almost 7 million people out of the new car market entirely and prevents many millions more from being able to afford new vehicles that meet their needs”.

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This September, the “EPA honored Hispanic Heritage Month by promoting a Marxist mass murderer,” Che Guevara, who killed many Hispanics. Che Guevara was the Cuban “revolutionary” and henchman of Fidel Castro. Guevara murdered children and political dissidents and imprisoned suspected homosexuals in labor camps, and called himself “Stalin II” (after Joseph Stalin, the Soviet dictator who tortured, murdered and starved to death more than 20 million people, especially ethnic minorities, like Ukrainians, Kazakhs, and Crimean Tatars). What’s next? Will the Education Department celebrate the bloodthirsty African dictator Idi Amin, who killed more than 300,000 Ugandans, as part of Black History Month? (Under the Obama administration, the Education Department has shown contempt for civil liberties like due process and free speech.)

As Buzzfeed noted at the time:

The Environmental Protection Agency commemorated the start of Hispanic Heritage Month with a picture of Che Guevara and a bit of plagiarism. An internal email . . .  distributed to agency employees . . . this Saturday, featured [an] image of a horse and buggy passing a billboard of the Marxist revolutionary, in addition to a listing of facts about Hispanic culture. . .that text and the photo appear to be lifted word-for-word and without attribution from the website Buzzle.com.

The EPA doesn’t just celebrate killers.  It also kills jobs.  NFIB lists the “EPA’s top 5 job killers,” recent rules that will wipe out hundreds of thousands of jobs, and likely cost over $1 trillion.  Some of the most costly new regulations will have no discernible public health benefit at all.

It’s not just businesses and workers that will suffer under Obama Administration policies, but also consumers.  Obama earlier admitted that “under my plan of a cap and trade system, electricity rates would necessarily skyrocket.”