November 2013

Post image for COP-19 Starts in Warsaw on November 11

The nineteenth Conference of the Parties (COP-19) to the United Nations Framework Convention on Climate Change begins in Warsaw, Poland, on Monday, 11th November.  After the failure to agree on a successor to the Kyoto Protocol at COP-15 in Copenhagen in 2009, the 195 parties to the UNFCCC at COP-18 in Doha, Qatar last year extended Kyoto while a new treaty is negotiated.  COP-19 is supposed to be the beginning of those negotiations.  A complete draft is due to be released at COP-20 in Lima, Peru in 2014, and the final version is due to be signed at COP-21 in Paris in December 2015.  The UNFCCC aims to have the “Paris Protocol” ratified and in effect by 2020.

That’s the schedule that has been agreed upon, but so far there is little sign that much progress will be made in Warsaw over the next two weeks.  One obstacle to making substantive progress is an ongoing dispute over procedural issues.  The UNFCCC makes decisions by consensus of the 195 member countries, but Russia objected last year at COP-18 in Doha that the chairman had ruled that a consensus had been reached to extend the Kyoto Protocol even though Russia, Ukraine, and Belarus strongly objected.  At the annual meetings of the subsidiary bodies in Bonn last summer, Russia successfully blocked proceeding with the agenda until the issue of decision making was considered.

Now, Russia has sent a letter to the UNFCCC Secretariat asking that defining consensus be placed on the agenda for Warsaw. On the other side, Mexico and Papua New Guinea in 2011 proposed that when a consensus cannot be achieved, decisions can be agreed by a majority of at least three-quarters.  India and China strongly objected to that proposal.

Assuming that these procedural squabbles don’t take up the whole two weeks, three of the main issues that could be considered are flexibility, inclusivity, and payoffs.  The Kyoto Protocol is a set of mandatory emissions reductions targets and timetables that were initially applied to 37 developed countries.  The United States never ratified Kyoto, and Canada withdrew last year.  United States senior climate negotiator Todd Stern in a speech in London last month said that the successor to Kyoto must be much more flexible. This flexibility could go so far as to allow each country to devise its own plan to lower emissions.  The European Union, on the other hand, supports continuing with legally binding targets.

Inclusivity is a key issue because of the rapid increase in greenhouse gas emissions in China and India.  China is now the world’s largest emitter by a wide margin over the United States, and India’s emissions have also increased fairly rapidly.  Thus, most developed countries naturally think that China (and India and Brazil) should undertake economically-damaging emissions reductions just as they have.  India, in particular, strongly disagrees.  India argues that the West caused the problem and so must solve the problem.  India recognizes that their continuing economic progress depends on inexpensive fossil-fuel energy.

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Post image for Tenth Circuit Ruling Bodes Poorly for Legal Challenges to Impending GHG Rule

In March 2012, EPA disapproved Oklahoma’s Regional Haze plan to improve visibility and, in its stead, imposed a federal plan that cost $1.8 billion more, but which failed to achieve a perceptible improvement over the state’s plan. Oklahoma Attorney General Scott Pruitt sued over EPA’s all-pain, no-gain Regional Haze plan in the Denver-based 10th Federal Circuit Court of Appeals, which, in July, sided with EPA in a two-to-one majority decision. Subsequently, AG Pruitt petitioned to have the entire 10th Circuit Court hear the state’s appeal. On October 31st, the court denied AG Pruitt’s petition without explanation. The state’s final recourse is to appeal to the U.S. Supreme Court.

The 10th Circuit’s ruling, if it stands, establishes a troubling precedent that could adversely affect future legal challenges to EPA’s impending greenhouse gas regulations for existing power plants. Under the Regional Haze program, EPA is required to issue “guidelines” pursuant to which States must submit visibility improvement plans. Oklahoma argued that it followed the guidelines, so EPA was required to approve the state’s plan. EPA argued that the State did not follow the guidelines.  Under administrative law, courts grant EPA a tremendous degree of deference; the question before the 10th Circuit was: How much deference should EPA afford States? The answer, according to the court, is none. If EPA reasoned that the State didn’t follow the guidelines, then the agency’s word carries the day. (Click here to read why the court’s reasoning was flawed).

The legal structure of the section of the Clean Air Act for Regional Haze is nearly identical to the provision of the act that allegedly authorizes EPA to regulate greenhouse gases from existing power plants. As such, the 10th Circuit Court’s ruling suggests that States will have minimal leeway in complying with EPA guidelines for regulating greenhouse gases from existing coal-fired power plants. Environmentalist organizations are lobbying EPA to use the guidelines to impose a cap-and-trade scheme on the States.

Post image for What I Told EPA at Its D.C. “Listening Session”

Yesterday, the EPA held an all-day “listening session” at its Washington, D.C. headquarters, ostensibly to gather ideas and information from the public about how best to reduce carbon dioxide (CO2) from existing power plants. The event was one of eleven listening sessions the agency hosted over the past three weeks. I was one of many people who “testified” at EPA HQ. We each had three minutes to speak.

I was there about an hour, and during that time none of the other witnesses presented ideas or information about how to reduce CO2 emissions from existing power plants. Rather, they deplored the climate “crisis” and implored the EPA to do everything in its power to replace “dirty coal” with “clean, renewable energy.”

In September, the EPA proposed its “carbon pollution” rule for new power plants. The listening sessions are on the agency’s planned follow-up measure in 2014 — guidelines instructing States how to reduce CO2 emissions from existing power plants. About 40% of U.S. electric generation comes from existing coal-fired power plants.

Here is more or less what I said when my turn came to speak:

I am Marlo Lewis, a senior fellow at the Competitive Enterprise Institute. I have come to offer you a word of caution: Don’t try to get cute with your guidelines. Don’t use the guidelines either to shut down existing coal plants, or to enact a national clean energy standard through the regulatory back door.

This caution is in order because of something I call the “bait-and-fuel-switch.”

Back in March 2011, the EPA published PSD and Title V permitting guidelines for greenhouse gases. The document stated that best available control technology (BACT) standards for CO2 would not require utilities planning to build new coal-fired power plants to “fuel switch” and build natural gas combined cycle (NGCC) power plants instead.

But only one year later, in March 2012, the EPA proposed a “carbon pollution” rule establishing new source performance standards (NSPS) for CO2 that nearly all NGCC plants already meet but exactly zero commercial coal power plants can meet. The proposal was transparently a fuel-switching mandate. And it was that even though NSPS is less stringent than BACT, and the agency had assured stakeholders that BACT for CO2 would not require fuel switching. [click to continue…]

Post image for Keystone XL Pipeline: What Are the Core Issues?

In the protracted conflict over the Keystone XL Pipeline, too much attention is paid to peripheral issues and not enough to the core issues.

Peripheral issues include whether the pipeline will create many or few jobs, lower or raise Midwest gasoline prices, reduce or increase the risks of oil spills, reduce or increase incremental greenhouse gas emissions.

Why are those issues peripheral?

Let’s begin with oil spill risk and gas prices. Surely if Keystone is built, there will be incidents of leaks and spills. There will also be regional effects on gas prices. But look at the big picture. The State Department (ultimately, President Obama) is supposed to make a “national interest determination” about the pipeline. The U.S. already has more than 2.5 million miles of oil and gas pipelines.

Oil and gas pipelines map U.S.

Can anyone argue with a straight face that the U.S. national interest is harmed by those pipelines? That adding another 1,179 miles of pipeline will push America over some kind of national interest ‘tipping point’? That we would be better off shipping all oil and petroleum products by truck, train, and barge? Or that we’d be even better off if there were no oil companies?

Humanity has been there, done that. It’s called medieval squalor. [click to continue…]

Post image for Gone with the Wind: Is an Energy Technology Sustainable If It Cannot Sustain Itself?

If this past year is any indication, wind energy may become little more than a dream remembered. That is, unless the government continues to step in to support the industry. According to the American Wind Energy Association (AWEA), only seventy mw of wind power was added to the nation’s power supply; the slowest increase since recordkeeping began in 2005. The cause of the decrease in the rate of expansion is attributed to uncertainty building up at the end of last year over whether there would be an extension of the Federal Wind Production Tax Credit (PTC) in 2013.

Tom Kiernan, the CEO of AWEA, describes last year’s uncertainty as engendering a boom-bust cycle, delaying the planning of new projects for 2013. What Kiernan says, however, is misleading.  It is not the uncertainty over the wind PTC that created this problem. The problem comes from the wind energy boom generated by the cash grant program of the American Recovery and Reinvestment Act, or section 1603.

As Lisa Linowes explains on

 We’ve long known that Section 1603, the cash grant program enacted under The American Recovery and Reinvestment Act of 2009 (ARRA), fueled a wind bubble that was certain to burst, and it did.

Under 1603, roughly 30,000 megawatts of new wind was installed, more than doubling the wind capacity in the country. As much as 90% of the 13,000+ MW of wind installed last year alone can be attributed to Section 1603, not the PTC.


In order to receive the grant, projects needed to be in-service by the end of 2012. Developers raced to meet the deadline which flushed the industry’s project pipeline.

This is a clear example of the knowledge problem; government inefficiently allocating resources (in this case, wind subsidies) when the market would provide a better solution. [click to continue…]

Post image for Updated Antidote to Climate Hysteria

This post links to a Power Point presentation I’ll be giving tomorrow to CEI’s fall 2013 interns. It is similar to a presentation I gave to our summer interns in August but includes a few more slides and references.

My thesis, then and now, is that climate change is not a “crisis” or “planetary emergency.” Here’s a quick overview:

  • “Worse than we thought” is a political mantra pretending to be a scientific finding. The state of the climate is better than they told us.
  • An unanticipated 17-year warming pause, the growing divergence between model predictions and observed warming, and a pile of recent studies indicate that “consensus” science overestimates the key variable: climate sensitivity. Lower sensitivity means less warming and smaller impacts.
  • The scariest parts of the “planetary emergency” narrative – dire warnings about ocean circulation shutdown triggering a new ice age, ice sheet disintegration raising sea levels up to 20 feet, malaria epidemics coming to a neighborhood near you, mass extinctions from runaway warming – are science fiction, not science.
  • The only card left in the alarmist deck is extreme weather. However, there has been no long term trend in the strength or frequency of hurricanes, tornadoes, U.S. floods and drought.
  • Heat waves have become more frequent but, paradoxically, the more common hot weather becomes, the more heat-related mortality declines: People adapt!
  • There is no long-term trend in “normalized” extreme weather damages (losses adjusted for increases in wealth, population, and the consumer price index).
  • Globally, mortality rates and aggregate mortality related to extreme weather have declined by 98% and 93%, respectively, since the 1920s.
  • The state of the world keeps improving as CO2 emissions increase.

To view the slide show, click on Climate Change: Be Not Afraid!

Post image for Study Finds Cap-and-Trade Did Not Cause Business Flight from EU (but is no vindication of Kyoto-style policy)

A study by Netherlands-based consulting firm Ecorys finds that during 2005-2012, no EU firms relocated overseas to avoid costs associated with the European emissions trading system (ETS).

Note: The study does not spin this finding as evidence that carbon regulation is good for business or poses no risks to EU economies.

Why haven’t firms moved out of Europe to avoid the higher costs imposed by the ETS?

The main reason is simply that the direct costs of the ETS have been “very limited.” According to a Greenwire article on the study, “emission allowances this year slumped to a record low of $3.36 a metric ton in April amid a record surplus of permits due to the global recession.”  For perspective, that works out to gasoline tax of 3.3 cents per gallon.

Permit prices were low because allocations were higher than required to meet projected demand – and then demand plummeted due to the recession and “lower production.”

Reducing costs even further is the fact that “most allowances were allocated to installations for free.”

A second reason the ETS did not trigger a business exodus is that relocating a company is itself costly. The ETS increased electricity prices, and this was “quite a relevant factor” to industry. However, “Most industry has heavy upfront investments (sunk costs) so they will not quickly move production. The lead-times for moving industrial production facilities are easily over 10 years.”

A third reason – strangely not mentioned in the study – is that EU governments enacted “compensation funds” to subsidize ETS-covered manufacturers and keep them from offshoring their operations. [click to continue…]