November 2014

Post image for Supreme Court to Review EPA’s Mercury (Utility MACT) Rule — We Told You So!

In what the Wall Street Journal calls a “setback for the Obama administration,” the Supreme Court today announced it will review a challenge by more than 20 states and industry groups to EPA’s Clean Air Mercury Air Toxics Standards (MATS) Rule, also known as the Utility MACT (Maximum Achievable Control Technology) Rule.

Petitioners argue that the Clean Air Act (CAA) required EPA to take implementation costs into account when deciding whether MACT regulation of hazardous air pollutant (HAP) emissions from power plants is “appropriate and necessary.” EPA did not do so.

By EPA’s own estimate, the MATS Rule will cost utilities $9.6 billion in 2016. Yet the HAP reductions that are the Rule’s ostensible purpose would yield only $0.5 million to $6 million in health benefits in the same year, even making outlandish assumptions in the rule’s favor.

My colleague William Yeatman predicted, back in April, that D.C. Circuit Court of Appeals Judge Brett Kavanaugh’s powerful dissent in White Stallion Energy Center LLC et al. v. EPA et al. would persuade the Supreme Court to review the decision. Here’s the nub of the commentary I posted at the time:

Perhaps more importantly, §112 [of the Clean Air Act] tasks EPA to determine whether MACT regulation of HAPs is “appropriate and necessary” only for “electric steam generating units.” For all other major sources of HAP emissions, EPA has no discretion and is simply required to promulgate MACT regulations. The statute thus seems to contemplate that, in the special case of coal power plants, MACT regulation may not be appropriate even if the associated HAP emissions pose public health hazards. In other words, a less stringent form of Clean Air Act regulation (such as new source performance standards) or state-level regulation might be “appropriate.”

Yeatman opines that Kavanaugh’s dissent may persuade the Supreme Court to review the case. If so, the Court might rule that EPA is allowed or even required to consider costs when determining what is “appropriate” when regulating HAP emissions from power plants. That, in turn, could set the stage for litigation on whether the MATS Rule is too costly to be “appropriate” within the meaning of the statute.


Post image for U.S.-China Climate Deal: Who Snookered Whom?

In the recent U.S-China climate deal, who snookered whom? Let’s first review what happened and place it in historical context.

Two weeks ago, President Obama and Chinese President Xi Jinping announced a Joint Agreement on Climate and Clean Energy Cooperation designed to “inject momentum into the global climate negotiations on the road to reaching a successful new climate agreement next year in Paris.”

In the past, China had rejected U.S. and EU proposals to adopt legally-binding emission limitations, and demanded that industrialized nations make deep emission cuts and pony up billions of dollars (as much as 1.5% of their combined GDP annually) to help developing countries adapt to climate change.

Without formally repudiating those negotiating positions, Xi pledged that China’s carbon dioxide (CO2) emissions would peak by 2030, and he did not condition that commitment on U.S. financial assistance to developing countries. (Although Xi likely knew that, three days later, at the Nov. 14 G-20 Summit in Australia, Obama would pledge $3 billion in climate assistance for poor countries.)

President Obama, for his part, pledged that America would cut its CO2 emissions 26%-28% below 2005 levels by 2025. That goes beyond the President’s 2009 Copenhagen treaty proposal to cut U.S. CO2 emissions 17% below 2005 levels by 2020.

Some critics conclude that Xi outfoxed Obama, because, under the Joint Agreement, U.S. emissions must begin to decline immediately whereas China’s don’t have to plateau until 14 years after Obama leaves office. Some also argue that Xi simply promised to do what China intends to do anyway.

On the other hand, historian Rupert Darwall, citing the White House briefing memo, points out that the scope of China’s commitment is “truly staggering.” From the memo:

China’s target to expand total energy consumption coming from zero-emission sources to around 20 percent by 2030 is notable. It will require China to deploy an additional 800-1,000 gigawatts of nuclear, wind, solar and other zero emission generation capacity by 2030 – more than all the coal-fired power plants that exist in China today and close to total current electricity generation capacity in the United States.

Last Friday, Bloomberg News published an analysis confirming the colossal scale of China’s commitment under the Joint Agreement.

[click to continue…]

Post image for Renewable Fuel Standard: EPA Retreats from Cutbacks

Greenwire (subscription required) reports that EPA will pull back from its November 2013 proposal to reduce this year’s Renewable Fuel Standard (RFS) blending targets. However, a final rule establishing RFS targets for 2014 is not expected until 2015.

By law, EPA was supposed to finalize the 2014 targets in November 2013.* EPA only proposed the 2014 targets last November, and things have been on hold since then.

Because the statutory blending target for 2014 exceeded the amount of ethanol that could actually be sold as E10 (motor fuel containing 10% ethanol, the maximum blend millions of vehicles can use without risk of engine damage and voided warranties), the agency proposed to trim the 18.15 billion gallon statutory target to 15.21 billion gallons, a 16% cutback. That ignited a firestorm of protest from the biofuel lobby, and EPA has been dithering ever since.

What’s the policy significance of today’s news?

It’s common knowledge that the RFS is a textbook study in the law of unintended consequences. The program inflates food and fuel costs, exacerbates world hunger, contributes to political instability and violence in developing countries, expands aquatic dead zones, accelerates wetlands conversion and habitat loss, and likely increases net greenhouse gas emissions.

EPA’s more-than-year-long delay in finalizing the 2014 targets reveals what may be the most damning unintended consequence yet: market unpredictability. [click to continue…]

Post image for EPA Air Regulations: 15% Real-Dollar (35% Nominal-Dollar) Increase in Utility Bills by 2020, Study Finds

A new study by Energy Ventures Analysis for Peabody Energy examines the cumulative impacts on electricity and natural gas costs from 2012 to 2020 due to recent and proposed EPA regulations.

Regulations examined include: new national ambient air quality standards (NAAQS) for ozone and particulate matter; the Cross State Air Pollution Rule (CSAPR) to address interstate transport of air pollution; Mercury Air Toxics Standards (MATS) Rule; regional haze regulations; and the Clean Power Plan (CCP), proposed in June 2014, to reduce carbon dioxide (CO2) emissions from state electric power sectors.

The study, Energy Market Impacts of Recent Federal Regulations on the Electric Power Sector, forecasts the following real-dollar (inflation-adjusted) impacts in 2020 compared to 2012:

  • Annual power and gas costs for residential, commercial, and industrial consumers will be $173 billion higher—a 37% increase.
  • Average annual household gas and power bills will increase by $293 or 15%.
  • Residential power bills increase the most in Texas, Mississippi, Pennsylvania, Maryland, and Rhode Island. Families in those states will pay $566 more annually for electricity in 2020 than in 2012.

Because “income growth is being outpaced by inflation for many Americans (the lower earning half of U.S. households experienced a 25% decline in real income from 2001-2014),” the report’s authors believe “it is more appropriate to focus on the results in nominal terms.”

Here are the results presented above in actual (non-inflation-adjusted) dollars: [click to continue…]

Cooler Heads Digest 21 November 2014

Post image for No Brainer: Senate Should Approve Keystone XL

On Friday, the House passed H.R. 5682, Louisiana Republican Rep. Bill Cassidy’s bill to approve the Keystone XL Pipeline, by 252-161. On Tuesday, the Senate takes up North Dakota Republican Sen. John Hoeven’s identical legislation, S. 2280. As of Friday, 59 senators had publicly committed to support the bill — one vote shy of the 60 required to send the measure to the President’s desk.

The President should have approved the KXL long ago. The Keystone controversy is completely artificial — a fabrication of green politics

The State Department is the lead agency in determining whether to grant the TransCanada Corporation permission to construct the pipeline for one reason only — the project crosses the U.S.-Canada boundary line, making it technically an issue of international relations. State’s job is to determine, on behalf of the President, whether the project would serve the U.S. national interest.

TransCanada filed its first application for a cross-border permit in September 2008. It has taken State more than six years not to render a decision. Yet the issue is a no-brainer.

  • Do modern commerce and transport chiefly run on petroleum-based products? Yes.
  • Are pipelines the most economical and safe way to transport large volumes of petroleum? Yes.
  • Is Canada our staunch ally and biggest trading partner? Yes.
  • Is Canada already the largest single source of U.S. petroleum imports? Yes.
  • Would the KXL enhance the efficiency of oil transport from Canada to U.S. markets? Yes.
  • Would the KXL support tens of thousands of American jobs and add billions to the GDP during the construction period? Yes.
  • Would all the financing be private and not cost taxpayers a dime? Yes.

So how could building the KXL not be in the national interest?

According to anti-Keystone protest leader Bill McKibben, “If this thing gets built, it’s game over for the planet.” In reality, the KXL is climatologically irrelevant. As Cato Institute scientist Chip Knappenberger shows, using EPA climate sensitivity estimates, even under the unrealistic assumption that all 830,000 bpd of Canadian crude coming through the pipeline is additional oil in the global supply that would otherwise remain in the ground, the warming contribution works out to about 1/100th of a degree Celsius by century’s end. “So after nearly 100 years of full operation, the Keystone XL’s impact on the climate would be inconsequential and unmeasurable.” [click to continue…]

Cooler Heads Digest 14 November 2014

Post image for The Profound Political Illegitimacy of Obama’s Climate “Deal” with China

Three days ago, the President reached a much ballyhooed “deal” with China to mitigate climate change. In a recent post, my colleague Myron Ebell explained that the agreement is non-binding and therefore empty. Another colleague of mine, Chris Horner, had a more pessimistic take: He argues that the President is trying to establish precedential “customary international law.” Regardless whether the agreement has teeth, it enjoys zero political legitimacy, as is demonstrated by the brief timeline below:

  • 2012: President Obama ran to the right of Mitt Romney on energy policy during the 2012 election. In so doing, the President took great pains to avoid mentioning climate change.
  • November 2014: Environmentalists spend an unprecedented sum to make climate change a major issue in the midterm elections. However, upon realizing that voters simply don’t care about climate change, the greens shifted tactics and instead spent their money on run of the mill attack ads. They still lost.

To recap: Polling data and election results demonstrate clearly that American voters give ultra-low priority to climate change. This explains why opposition to cap-and-trade in the Congress is healthily bipartisan. It also explains why Obama dodged the issue of climate change in 2012. And it explains why environmental special interest had to shelve climate change as an issue in the 2014 midterm elections, even though they desperately wanted to harp about it. Finally, the absence of a popular mandate explains why the President’s climate “deal” with China is flavored so authoritarian: According to the White House, the “deal”—which, as described by various editorial boards is “landmark” international diplomacy—does not require congressional approval, because it is based on executive actions that he’s taking without congressional approval. It’s a closed loop of executive power!

Post image for Carbon Tax Advocates Discuss Post-Election Prospects; Ignore Lesson of Plato’s Republic

The Energy and Enterprise Initiative, an advocacy group headed by former South Carolina Republican congressman Bob Inglis, launched a new Web site today: In an inaugural blog post, Mr. Inglis opines about the post-election day prospects for enacting a carbon tax:

The timing couldn’t be better as far as we’re concerned. On Election Day 2014, Republicans won the majority in the Senate and increased their majority in the House, creating a huge opportunity for real conservative reform. . . . Now’s the time to step up with free-market solutions and show the country that clean air and clean-energy innovation are best achieved by accountable free enterprise, not big government.”

Huh? What Inglis means by “accountable free enterprise” is a carbon tax. Republicans “won the majority in the Senate and increased their majority in the House” despite Tom Steyer, Environmental Defense Action Fund, NRDC Action Fund, League of Conservation Voters, and Sierra Club spending an unprecedented $85 million to elect ‘climate champions’ and unseat ‘climate deniers.’ Consistent with survey research finding climate change to be among voters’ lowest priorities, the election results indicate that Republicans are less vulnerable than ever to green attack ads.

So why is now the time for a Constructive Republican Alternative Proposal that would raise energy prices, deny Americans the benefits of affordable, plentiful, reliable coal-based power, and have negligible impacts on potential climate change?

Suppose the attacks had worked, and the GOP sustained huge losses; what would Inglis say then? Very likely, ‘I told you so.’ He would blame Republicans for failing to offer a ‘free-market’ solution (viz. carbon taxes), leaving voters no choice but to support Obama’s climate policies. Now more than ever, he would undoubtedly say, Republicans need to rally round the carbon tax or become irrelevant to the national debate. In short, from opposite results, Inglis would likely draw the same conclusion.

[click to continue…]

Headlines tout that the “U.S. and China have announced a landmark agreement to curb carbon emissions,” with the U.S. promising (to China) that it would emit 26% to 28% less carbon dioxide in ten years hence than it did ten years ago.  Naturally, under our system, for any such promise to be meaningful it requires Senate ratification under the Constitution’s Art. II, Sec. 2.  Therefore, some explanation is in order.

This promise — to China, recall — is not binding, is not intended to be binding, and will not be part of a binding promise to the rest of the world for the December 2015 Paris climate treaty talks.

This is the latest example of a new species of promise described as “politically binding”, a turn of phrase introduced in this context during the Bush years, in recognition of the fact that two-thirds of the US Senate will never agree to Kyoto-style constraints.  Shifting to “politically binding” promises also is an effort to circumvent that same reality by effectively introducing treaty commitments to the country without declaring them at customs.

Specifically, the Obama administration’s rhetorical vow is part of the shift in strategy recognizing that the successor to the 1997 Kyoto treaty must culminate with a series of “soft” commitments (those who doubt this might compare the rhetoric by pressure groups embracing Beijing with their insistence during the Bush era that nothing less than a binding pact would do).

In very short, the idea is to embed the Obama EPA’s proposed GHG rules in a series of promises to the world, mindful of “customary international law.”  Under that often gauzy notion, once commitments, however informal, rise to a certain level of recognition, a nation is bound to not violate their “object and purpose.”  So, post-Paris, options could include (according told draft pleadings produced under open records laws) activist state attorneys general turning to the court system to add law to otherwise non-binding commitments.  That would similarly afford an opening to compliant regulatory agencies enamored of the practice known as sue-and-settle.

[click to continue…]