November 2014

Greenwire (paywall protected) reports that KiOR, Inc., a biofuel company backed by billionaire Vinod Kohsla, missed a $1.8 million loan payment to the state of Mississippi, now owes more than $312 million, and filed for Chapter 11 bankruptcy protection late Sunday:

The company estimated its assets are worth between $10 million and $50 million and reported debts between $100 million and $500 million (Jeff Amy, AP/ABC News, Nov. 10).

In addition, the Pasadena, Texas-based company said its default on the Mississippi loan triggered provisions of other loans, making an additional $234 million immediately due (AP/Fuel Fix, Nov. 7). — SP

EPA once pinned its hopes on KiOR to supply 9 million of the agency’s 17 million gallon 2014 cellulosic biofuel quota. As of July, however, U.S. cellulosic production was about 50,000 gallons, or 0.3% of EPA’s target, according to Platts energy analyst Herman Wang. EPA’s target is itself less than 1% of the statutory 1.75 billion gallon cellulosic target for 2014.

More proof, if any were needed, that the point of central planning is not to accomplish its stated purposes but to amass power, rig markets, and (in democratic countries) buy votes.

On August 20, commodity analyst Dave Juday contributed a guest editorial to this blog titled “KiOR News Underscores Problems with Renewable Energy Industrial Policy.” Because the column is even more timely today, I repost it (lightly edited) below:

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Climate scientist John Christy states the common sense of the matter when he says, “If it’s not economically sustainable, it’s not sustainable.”

Why have carbon dioxide (CO2) emissions surged despite a quarter century of global warming advocacy?

Source: Carbon Dioxide Information Analysis Center

Contrary to Al Gore, Tom Steyer, and IPCC Chair Rajendra Pachauri, the answer is not ‘lack of political will’ or ‘the Koch brothers.’ The root cause is far more fundamental: Commercial energy is essential to civilization, much of the world is energy poor, even in industrialized countries low- and middle-income households struggle with high energy costs, and zero-emission energy sources that are cheap, reliable, and scalable do not yet exist.

Consequently, a political movement bent on taxing, regulating, and mandating the world ‘beyond coal,’ ‘beyond petroleum,’ and ‘beyond gas’ is doomed to fail (although, sadly, it can do considerable economic damage before finally imploding).

A new report by Manhattan Institute scholar Robert Bryce explains by the numbers why the world is nowhere near ‘beyond coal.’ Policies aggressive enough to achieve IPCC and other popular CO2 reduction targets would inflict severe economic losses, rendering such policies unsustainable.

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Per the twitter account of SNL Energy’s Dan Lowrey:

The Hill’s Laura Barron Lopez reports the full quote by Sierra Club executive director Michael Brune:

“Despite the climate movement’s significant investments and an unprecedented get out the vote program, strong voices for climate action were defeated and candidates paid for by corporate interests and bolstered by sinister voter suppression tactics won the day.”

You can’t make this stuff up!

Of course, this is utter nonsense. As my colleague Myron Ebell explained here, environmental special interests & their billionaire benefactors had intended to make climate change an issue in this campaign, but they quickly learned an inconvenient truth: Voters don’t care about climate change. So, instead of spending scores of millions of dollars highlighting environmental issues, they spent all their money on run of the mill political attack ads. The upshot is that unsubstantiated, wild-eyed claims of “voter suppression” fail miserably to account for why “strong climate action” candidates lost. Rather, they lost for the ultra-simple reason that voter priorities are far different that those shared by environmental special interests.

EPA’s greenhouse gas regulation for existing power plants, known as the Clean Power Plan, is off-putting for a number of reasons. For starters, it’s expensive and threatens electric reliability. The regulation, moreover, is an affront to federalism, insofar as it usurps the States long-held, exclusive authority to oversee retail electricity markets. Despite these drawbacks, the rule would in no way impact the climate.

That’s a parade of horribles; however, the most off-putting element of the Clean Power Plan is the nuts and bolts of the EPA’s regulatory reasoning, which, in practice, would give the agency unlimited power.

Allow me to explain. As I indicate above, the Clean Power Plan would fundamentally overhaul the power sector. It is, as such, a big deal. And yet, this hugely consequential policy was based on an “obscure” and infrequently-used provision of the Clean Air Act–§111(d). In order to engender such a big policy from such a small statutory authorization, EPA had to get creative. Whereas, in the past, EPA deployed Clean Air Act §111(d) on a source-by-source basis, EPA aggregated sources subject to the Clean Power Plan. Thus, the rule applies to the entire power sector within a States, rather than one source category (i.e., coal plants, gas plants, etc.) at a time.*

EPA’s unprecedented aggregation of sources subject to the rule is an unsettling precedent, because it suggests EPA’s power is unlimited. If EPA can group together technologies as disparate as a coal-fired boilers, gas turbines, and solar panels, then there’s no logical endpoint to the agency’s authority to aggregate sources. What’s to stop EPA from adding manufacturers? Or livestock farms? Under the precedent established by the Clean Power Plan, EPA can regulat anything and everything pursuant to 111(d), which is, again, a short and obscure provision of the statute.

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The mainstream media have begun to take notice that the environmental movement is spending a lot of money to elect candidates in the 4th November elections.  Chris Mooney, an environmental advocate-reporter who was recently hired to write a Washington Post blog, posted an article on 27thOctober with the headline, “Environmental Groups Are Spending an Unprecedented $85 million in the 2014 Elections.” Mooney got his figures from a 24th October memo (posted here) by five leaders of the effort: Joe Bonfiglio of the Environmental  Defense Action Fund, Sky Gallegos of NextGen Climate Action (the group funded by billionaire Tom Steyer), Heather Taylor-Miesle of the NRDC Action Fund, Daniel J. Weiss of the League of Conservation Voters, and Melissa Williams of the Sierra Club.

Greenwire (subscription required) headlined its article on the scale of environmental pressure group spending in the election, “Are Money and Power Changing the Environmental Movement?”  That may have been a newsworthy topic about twenty-five or thirty years ago.  In an excellent front-page article in the Washington Times, Valerie Richardson focuses on a much more timely angle—the fact that all this spending has done little to make climate change and other environmental concerns into major campaign issues.

Richardson writes: San Francisco billionaire Tom Steyer has spent a staggering $76 million to promote climate change as a political issue in this year’s elections, but the subject isn’t exactly firing up the electorate.  Polls show voters continue to rank climate change at the bottom of their priority lists. Even in races featuring the ‘Steyer Seven,’ the Democratic candidates selected by Mr. Steyer as the chief beneficiaries of his largesse, the issue is barely registering on the campaign trail.”

The fact that their issues aren’t resonating with voters has been noticed by the environmental pressure groups trying to maintain a Democratic majority in the Senate.  As a result, many of the ads that they are paying for are on other issues, such as abortion, all the money being spent on behalf of Republicans by the Koch brothers, and various economic issues.

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