February 2013

Post image for EPA Cuts 2012 Cellulosic Blending Target to Zero

“U.S. EPA has altered its cellulosic biofuel requirements for 2012 — from 8.65 million gallons to zero,” today’s Climatewire reports. In January, the D.C. Circuit Court of Appeals vacated EPA’s 2012 cellulosic biofuels standard. “As a result,” Climatewire explains, “obligated parties — oil companies required to show EPA that they blend biofuels in their fuel supply — won’t need to provide information on their compliance. The agency will submit refunds to companies that have submitted payments for 2012 cellulosic waiver credits.”

Who says there’s no justice in this world! For several years the EPA has fined refiners for not purchasing and blending ethanol made from switchgrass, wood chips, and other fibrous, non-edible plants. Refiners protested that there was no commercial cellulosic fuel to buy. The EPA argued that didn’t matter because the Renewable Fuel Standard (RFS) is meant to be “technology forcing.” The agency thus based each year’s cellulosic target on aspirational (rather than realistic) projections of how much cellulosic fuel would be produced. It then cheerfully collected fines for all the gallons of phantom fuel refiners did not blend.

The Court held that punishing refiners for what the ethanol industry failed to do is not “technology forcing”:

EPA applies the pressure to one industry (the refiners) [citation omitted], yet it is another (the producers of cellulosic biofuel) that enjoys the requisite expertise, plant, capital and ultimate opportunity for profit. Apart from their role as captive consumers, the refiners are in no position to ensure, or even contribute to, growth in the cellulosic biofuel industry. “Do a good job, cellulosic fuel producers. If you fail, we’ll fine your customers.” Given this asymmetry in incentives, EPA’s projection is not “technology-forcing” in the same sense as other innovation-minded regulations that we have upheld.

Zeroing out the RFS cellulosic blending targets established by the Energy Independence and Security Act (EISA) is long overdue. [click to continue…]

Post image for Is Presumed EPA Nominee Trustworthy?

The Washington Post reports that the President is poised to nominate Gina McCarthy to succeed Lisa Jackson (a.k.a. “Richard Windsor”) as EPA administrator. If/when the Senate takes up her confirmation, lawmakers should know that McCarthy, the current chief of Air Regulation at the EPA, has a history of misleading Congress and the public on two of EPA’s most expensive regulations.

As CEI Senior Fellow Marlo Lewis points out in a 2011 editorial:

[McCarthy and other EPA officials] denied under oath that motor vehicle greenhouse gas emission standards are “related to” fuel economy standards. In so doing, they denied plain facts they must know to be true. They lied to Congress.

He elaborates:

That greenhouse gas emission standards implicitly regulate fuel economy is evident from the agencies’ own documents. As EPA and NHTSA acknowledge in their joint May 2010 Greenhouse Gas/Fuel Economy Tailpipe Rule (pp. 25424, 25327), no commercially available technologies exist to capture or filter out carbon dioxide (CO2) emissions from motor vehicles. Consequently, the only way to decrease grams of CO2 per mile is to reduce fuel consumption per mile — that is, increase fuel economy. Carbon dioxide constitutes 94.9% of vehicular greenhouse gas emissions, and “there is a single pool of technologies… that reduce fuel consumption and thereby CO2 emissions as well.”

That’s not the only time she’s willfully confused the public on a major regulation.

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Post image for Richard Windsor Makes Her Appearance in Second Batch of EPA E-mails

The Environmental Protection Agency released to Chris Horner of the Competitive Enterprise Institute late in the evening on Friday, 15th February, part of the second of four batches of e-mails that respond to a Freedom of Information Act request.  EPA was forced to turn over the approximately 12,000 e-mails only after CEI filed suit in federal court.  On 20th February, the EPA released some more e-mails in order to get close to the 3,000 they promised the court they would release each month for four months.  All the e-mails have been posted on the web by the EPA and may be seen here.

Since EPA Administrator Lisa Jackson recently left office, the EPA no longer needs to guard her Richard Windsor alias e-mail address.  Thus Richard Windsor now appears as the recipient or sender of the e-mails.

Many of the e-mails are heavily redacted.  The reason claimed by EPA for most of the redactions is that they are part of the pre-decisional deliberative process and therefore exempt from FOIA.  CEI will be going back to court to challenge many of these redactions as improper and some as laughably so.  The judge will have a lot of fun reading to do.

Two e-mails that were not redacted concern the Coal Ash Rule.  The first e-mail, dated 15th December 2009, is from Allyn Brooks-LaSure in the Administrator’s office and is addressed to Jackson and several other EPA officials.  It can be found as numbered document 476 in Part B of the second release.   Brooks-LaSure writes:

Administrator, you have your own Christmas carols…

And then copies a December 15, 2009 blog post by Rob Perks, Director of the Center for Advocacy Campaigns at the Natural Resources Defense Council:

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First, it was 1,200 emails of the Washington Post daily headlines, Google alerts of everything written about the Environmental Protection Agency on a given day and a compendium of blogs that mentioned the EPA. Then, having had their fun, EPA officials got serious in the second tranche of emails they released to CEI late Friday, pursuant to a court ruling that ordered the agency to comply with our FOIA requests. This time, we got actual emails … that revealed a lot … about the fine art of redaction. Remember, this is the production of the most powerful regulatory agency of the most transparent administration in history. “We have nothing to hide,” the EPA has told us. Sure doesn’t seem that way to us:

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Post image for State of the Union Raises Hope for America

President Barack Obama’s State of the Union address to Congress on 12th February gives me new hope for America’s economic prospects.  The fact that a president who is so thoroughly misinformed and misguided has not been able to totally wreck our economy is evidence of the resilience of America’s institutions and of the entrepreneurial spirit of its citizens.  This does not mean that I expect our current robust one percent economic growth will continue; on the contrary, I expect a colossal recession in the next few years as a result of the disastrous policies being pursued by the Obama Administration and Federal Reserve Chairman Ben Bernanke.

The President spent more time talking about energy and climate than any other issues.  He noted that greenhouse gas emissions (which he called “dangerous carbon pollution that threatens our planet”) have declined in the past four years, but did not mention that economic stagnation is one of the major causes.  Nor did he mention that global greenhouse gas emissions have continued to increase rapidly because of robust economic growth in China and other industrializing countries.

He went on to say: “But for the sake of our children and our future, we must do more to combat climate change. Yes, it’s true that no single event makes a trend. But the fact is, the 12 hottest years on record have all come in the last 15. Heat waves, droughts, wildfires, and floods – all are now more frequent and intense. We can choose to believe that Superstorm Sandy, and the most severe drought in decades, and the worst wildfires some states have ever seen were all just a freak coincidence. Or we can choose to believe in the overwhelming judgment of science – and act before it’s too late.”

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Post image for Study Links Ethanol Policy to Food Price Increases, Mideast Turmoil

A report published in October 2012 by the New England Complex Systems Institute (NECSI) links soaring corn and agricultural commodity prices to food riots and turmoil in North Africa and the Middle East.

Although several factors may contribute to political unrest, acknowledge Dr. Yaneer Bar-Yam and two co-authors, “the timing of violent protests in North Africa and the Middle East in 2011 as well as earlier riots in 2008 coincides with large peaks in global food prices.” In poor countries with little or no local agriculture to “buffer” swings in global supply conditions, the central government “may be perceived to have a critical role in food security. Failure to provide security undermines the very reason for existence of the political system.”

In short:

When the ability of the political system to provide security for the population breaks down, popular support disappears. Conditions of widespread threat to security are particularly present when food is inaccessible to the population at large.

Soaring food prices triggered food riots in both 2008 and 2011.

Figure explanation (references omitted): Time dependence of FAO Food Price Index from January 2004 to May 2011. Red dashed vertical lines correspond to beginning dates of “food riots” and protests associated with the major recent unrest in North Africa and the Middle East. The overall death toll is reported in parentheses. Blue vertical line indicates the date, December 13, 2010, on which Dr. Bar-Yam and colleagues submitted a report to the U.S. government, warning of the link between food prices, social unrest and political instability. Inset shows FAO Food Price Index from 1990 to 2011. [click to continue…]

According to an article in the Washington Post, Maryland Governor Martin O’Malley’s long-sought offshore wind project is positioned to win approval from the state legislature within the upcoming weeks.  Environmentalists have fought hard to encourage States and developers to build off-shore wind projects on the East Coast. At least six wind farms have been proposed in the region. However, owing to the inefficient and costly nature of offshore wind farms, combined with the need for heavy subsidization, none of these projects have managed to gain any traction.

The new bill, known as the Maryland Offshore Wind Energy Act of 2013, will designate a “Wind Energy Area”, a zone in coastal waters situated about 10 miles east of Ocean City. It will also establish a $10 million Offshore Wind Business Development Fund designed to provide incentives and support for small businesses entering into the newly created industry.

Past attempts to approve the Maryland project have been met with strong opposition from both the state legislature and developers.

The Maryland legislature in 2010 refused to bring the issue up for a vote, warning that the project would cost Maryland taxpayers twice the initial estimates of $1.5 billion. Further opposition to the project arose after it was revealed that the governor’s former chief of staff was one of eight bidders to develop the project.

Developers of the project have been equally pessimistic.  Many developers have noted the high price and low energy makes the project an unappealing investment.

While developers continue to withhold support for the proposed project, several modifications that have been made to the new bill have managed to garner support from lawmakers.

What are these changes?  The Washington Post article details the following:

To win support from some lawmakers, O’Malley has embraced a financing model involving renewable energy credits that is unproven in the risky realm of offshore wind. To win over others, he has limited the cost of the subsidy to about $1.50 a month per household. The subsidy will amount to $2.5 billion over 20 years.

Also to reduce costs, the project was downgraded from a rated capacity of 500mw to 200MW. Because wind is intermittent, windmills typically generate less than a third of their rated capacity.

Post image for Ethanol: Bad Deal for Consumers Gets Worse

Responding to the anti-Renewable Fuel Standard Hill briefing discussed on this blog yesterday, Tom Buis, CEO of ethanol trade group Growth Energy, asserted that “homegrown American renewable energy provides consumers with a choice and savings” (Greenwire, subscription required). Rubbish. Under the Renewable Fuel Standard (RFS), ethanol consumption is a mandate, not a choice. 

Buis’s claim that ethanol relieves pain at the pump sounds plausible because a gallon of ethanol is cheaper than a gallon of gasoline. However, ethanol has about one-third less energy than gasoline and does not make up the difference in price. Consequently, the higher the ethanol blend, the worse mileage your car gets, and the more money you spend to drive a given distance.

FuelEconomy.Gov, a Web site jointly administered by the U.S. Environmental Protection Agency (EPA) and the Department of Energy (DOE) calculates how much a typical motorist would spend in a year to fill up a flex-fuel vehicle with either E85 (motor fuel made with 85% ethanol) or regular gasoline. The exact bottom line changes as gasoline and ethanol prices change. The big picture, though, is always the same: Ethanol is a net money loser for the consumer.

For example, at prices prevailing in late November 2012, it cost $500 more per year to drive on E85. When I checked FuelEconomy.Gov last week, E85 cost the average motorist an additional $600 per year.

A bad deal just got worse. At today’s prices, it would cost an extra $700-$900 a year to switch from regular gasoline to E85. Some savings! Small wonder that our ‘choice’ to buy ethanol must be mandated.

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Post image for Ex-Colorado Gov. Ritter on Energy Secretary Shortlist, Despite Record

Over at the Daily Caller News Foundation, reporter Greg Campbell takes a long look at ex-Colorado Governor’s qualifications to become the next Energy Secretary, a cabinet position for which he is rumored to be in the running. The President’s due diligence team should take note. Campbell writes:

One of Ritter’s main legacies as governor is a package of legislation called “the new energy economy” that was meant to kickstart renewable energy initiatives.

But his administration has come under scathing criticism recently for its handling of new energy projects. A state audit of the Colorado Energy Office — which began focusing on renewable energy initiatives during Ritter’s tenure — showed that it could not account for how it spent $252 million in state and federal money since 2007.

The agency could not say how much its programs cost or how much money was spent on them. The audit concluded that because of poor accounting, the energy office could not show that any of its programs were cost effective.

Much of the mismanaged money alluded to above came from the stimulus. In this respect, an Energy Secretary Ritter would provide a seamless transition from outgoing Secretary Steven Chu, whose tenure was characterized by pound-foolish stimulus spending.

According to Ritter, however, the state auditor has it all wrong:

He [Ritter] said that documents showing “in great detail” what was spent on various projects, as well as their outcomes, exist on the Internet and that there were “other avenues” for auditors to locate information.

Sooooo…….the missing exculpatory evidence is “on the internet”…..I’ve heard worse excuses, but not many.

In addition to the mismanagement of taxpayer money, Ritter also has a deep well of experience making energy more expensive. While in office, Ritter championed an agenda he labeled the “New Energy Economy.” In practice, it meant forcing Colorado ratepayers to use more green energy, and also fuel switching from coal to natural gas. Because green electricity costs more than natural gas electricity, which in turn costs twice as much as coal electricity in Colorado, Ritter’s New Energy Economy necessarily inflated electricity costs. As Campbell reports,

Indeed, a new report examining the financial impact of New Energy Economy legislation shows that Xcel Energy customers paid $484 million last year complying with the state’s tough new renewable energy standards and other clean energy measures, an amount that comprised 18 percent of Xcel’s total electricity sales in 2012.

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Post image for Hill Briefing Shreds Renewable Fuel Standard

This morning I attended a briefing on “The Renewable Fuel Standard: Pitfalls, Challenges, and the Need for Congressional Action in 2013.” Steve Ellis of Taxpayers for Common Sense moderated a panel of six experts. Although each expert spotlighted a different set of harms arising from the RFS, reflecting the core concern of his or her organization, this was a team effort, with panelists frequently affirming each other’s key points. Collectively, they made a strong case that the RFS is a “costly failure.” The briefing’s purpose was to demonstrate the need for reform rather than outline a specific reform agenda. Panelists nonetheless agreed that, at a minimum, Congress should scale back the RFS blending targets for corn ethanol.

Kristin Sundell of ActionAid explained how the RFS exacerbates world hunger, undermining U.S. foreign aid and international security objectives. The RFS diverts 15% of the world corn supply from food to fuel, putting upward pressure on food prices. A recent Tufts University study estimates that U.S. ethanol expansion during the past 6 years cost developing countries more than $5.5 billion in higher prices for corn imports. In Guatemala, the additional expense ($28 million) in 2011 effectively cancelled out all U.S. food aid and agricultural assistance for that year. Food price spikes, partly due to the RFS, were a factor in the recent turmoil in the Middle East. “Congress can’t control the weather, but they can control misguided energy policies that could cause a global food crisis,” Sundell said.

Kristin Wilcox of the American Frozen Food Institute discussed the RFS’s impact on food consumers. Corn is both the chief animal feed and an ingredient in about 75% of all frozen foods. Consequently, RFS-induced increases in corn prices drive up “the cost of producing a wide range of foods and leads to higher food bills for consumers.” In addition, when corn prices go up, so do the prices of other commodities that compete with corn such as wheat and soybeans. “Our position is very simple,” Wilcox said: “food should be used to fuel bodies, not vehicle engines.” She concluded: “Trying to change the price at the pump should not burden consumers with increased prices in the grocery check out aisle.” [click to continue…]