December 2014

For reasons of self-preservation, 2015 figures to be a very busy year for regulators in the Obama presidency. Under the Congressional Review Act (CRA), Congress has 60 business days from the promulgation of a major regulation to vote on a resolution that would vacate the rule. Due to the Presidential veto, however, the Congress’s CRA prerogative is usually toothless. Indeed, the only practical window for a successful CRA challenge occurs when the 60 day time limit (for Congress to act) overlaps with a new and like-minded presidential administration. And because the Congress only conducts, on average, about 10 business days a month, the Obama administration faces a deadline of about May 2016, by which it must promulgate all of its major regulations, in order to ensure that any one them cannot be subject to a successful Congressional Review Act resolution (under his successor President). As such, the clock is ticking, and most of this administration’s regulatory action will have to be wrapped up in the upcoming year. Below, I’ve listed what we can expect for 2015.

EPA’s Carbon Pollution Standards (Due Date: Any Day Now)

On January 8, 2014, EPA proposed a Clean Air Act rule to control greenhouse gas emissions from new coal fired power plants, known as the Carbon Pollution Standards. In practice, the regulation would effectively ban the construction of new coal-fired power plants, by requiring them to use carbon capture and sequestration, a technology that is far from ready for prime time. Under the Clean Air Act, EPA has one year from proposal to finalize a rule; it is most certain that the agency will miss this deadline (i.e., January 8, 2015). Nonetheless, the regulation is definitively in the pipeline and should be issued in the upcoming days.

The rule’s statutory foundations are sketchy, as we explain in CEI comments to EPA. And here, I give the top six reasons why the regulation is illegal as proposed.

In fact, EPA is taking a big risk if it decides to stay the course, and push the limits of what it could achieve with this rule. If the rule is vacated by Article III courts, then EPA loses its legal basis for its marque climate policy (the Clean Power Plan), as my colleague Marlo Lewis explained yesterday.

EPA’s “Natural Gas Strategy” (Due Date: January)

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Post image for Obama’s Greenhouse of Cards: Reflections for the New Year on Carbon Capture, the Clean Power Plan, and the COP 21 Climate Negotiations

The integrated carbon capture and storage (ICCS) project at the Boundary Dam Power Station has scooped up its first major award, even though it has been fully operational for less than three months.Estavan Lifestyles, Dec. 17, 2014

The economics only work at Boundary Dam in Saskatchewan for two reasons: a C$240 million government subsidy and a ready nearby customer for the carbon in Calgary-based Cenovus. . . .The CO2 is transported 66 kilometers (41 miles) to Cenovus Energy Inc. (CVE)’s oil fields where it is buried underground to coax additional crude from the reservoirs.Bloomberg News, Dec. 4, 2014

The news items above point to one of the Clean Power Plan’s (CPP) fatal legal flaws.

The CPP requires states to adopt CO2 performance standards for existing fossil fuel power plants. As such, the CPP is unlawful if its legal prerequisite — EPA’s proposed CO2 performance standards for new power plants, the so-called Carbon Pollution Standards (CPS) rule — is unlawful.

The CPS rule proposes a performance standard of 1,100 lbs. CO2/MWh for new coal power plants. Coal power plants can meet the standard only by installing carbon capture and storage (CCS) technology. Under §111(a) of the Clean Air Act (CAA), performance standards are to reflect the “best system of emission reduction” (BSER) that has been “adequately demonstrated,” taking “cost” into account. EPA claims CCS is the adequately demonstrated BSER for new coal power plants. Applesauce!

CAA §111(a) requires that performance standards be “achievable.” The D.C. Circuit Court of Appeals interprets the term to mean achievable for the industry as a whole (National Lime Association v. EPA, 627 F. 2d 416 at 443). However, as Bloomberg points out, the Boundary Dam Power Station is the world’s only utility-scale CCS power plant in commercial operation, and the “economics only work” because of two favorable circumstances atypical for the industry as a whole: a generous subsidy and proximity to an enhanced oil recovery (EOR) operation.

With the federal deficit still near half-a-trillion dollars, Congress is not about to pony up lavish subsidies for CCS power plants, especially when natural gas combined cycle (NGCC) power plants easily meet a more stringent CO2 emission performance standard (79 FR 1486) at much less cost (EIA, Table 1, p. 6). EPA identifies only 12 states with significant EOR operations (79 FR 1474). Coal power plants not located near oil fields would not have a market for their captured CO2. Thus, on two separate counts, the proposed standard is not achievable.

CCS combined with EOR is not BSER for an even more fundamental reason, first noted by my colleague William Yeatman. On a lifecycle basis, CCS + EOR produces more CO2 emissions than a conventional coal power plant. Without EOR, CCS is too costly to qualify as “adequately demonstrated.” But with EOR, CCS cannot be a “best” system of emission reduction because it increases rather than reduces emissions.

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News this week indicates the extent to which climate policy has assumed the driver’s seat of the auto industry.

gosplan 1111In a story on market “disrupters” in yesterday’s Financial Times ($), Robert Wright highlighted Ford’s decision to use aluminum to render the body of the F-150, the sales of which comprise up to 90 percent of the company’s profits. Aluminum never before has been incorporated into a mass produced vehicle on such a scale; Ford is using it in order to make the trucks lighter, and thereby achieve greater fuel efficiency/lower greenhouse gas emissions. Reports Wright:

“It’s a huge change,” Michelle Krebs, an analyst at says…Ford is hoping to gain first mover advantage. It believes that General Motors and Chrysler will have to redesign their vehicles to meet new fuel efficiency[/GHG] standards—and the first manufacturer to make the transition should retain a long term lead in the market.  

Also yesterday, the Wall Street Journal’s Ulrike Dauer reported that Audi plans to invest $29 billion over the next 5 years, of which 70 percent will go technologies that would “meet CO2 limits worldwide.”

Capital allocation decisions at auto companies are made years in advance, so presumably these businesses factored projected high fuel prices into their budgeting determinations. Nonetheless, government climate change mitigation targets reportedly figured paramount. Due to government policy, moreso than consumer demand, Ford is engineering a risky re-design of its best-selling car, and Audi is spending $20 billion over the next half decade. [click to continue…]

Two Fridays ago, EPA promulgated a final regulation, pursuant to the Resource Conservation and Recovery Act (“RCRA”), that establishes first ever federal limits on the disposal of “coal combustion residuals” (i.e., byproducts of burning coal for power). Coal combustion residuals also are known as “coal ash.”

Environmentalists aren’t happy with the rule, having deemed it too lenient. In particular, they are disappointed because EPA subjected coal ash to RCRA Subpart D, rather than the draconian RCRA Subpart C. [Read all the details here; notably, the agency chose the less restrictive rule only after it endured an interagency smackdown].

Here’s NRDC’s press release on the rule:

The Environmental Protection Agency’s long-awaited rule on disposal of toxic ash from coal-burning power plants falls far short of what’s needed to protect the public and our waterways from the millions of tons of dangerous sludge that is produced annually, the Natural Resources Defense Council said today.

And here’s what Sierra Club had to say:

While EPA and the Obama Administration have taken a modest first step by introducing some protections on the disposal of coal ash, they do not go far enough to protect families from this toxic pollution.

According to the greens, then, EPA’s coal ash rule “falls far short” because it doesn’t “go far enough.”

Let’s now turn to how far the greens would go. During the White House regulatory review process, the Office of Information and Regulatory Affairs performed an informal cost-benefit analysis of Sierra Club/NRDC’s preferred regulatory option (i.e., subjecting coal ash to ultra-onerous RCRA Subpart C). Discounted at an annual rate of 3%, OIRA estimated that Subpart C regulation would “avert 0.5 cancer cases at a cost-per-life-saved of $59 billion.” (See page 10 of OIRA’s review summary). This cost-per-life saved, moreover, fails to account for the administrative burden, as the rule would increase by a factor of 65 the amount of waste subject to Subpart C’s regulatory regime. It also fails to account for the inimical impacts of such a rule on the significant coal ash recycling industry (estimated annual revenues: $5-10 billion). [click to continue…]

Post image for Will Global Warming Reduce Wheat Production?

Asseng et al. (2014), a study published this week in Nature Climate Change, concludes that global warming “is already slowing yield gains at a majority of wheat-growing locations,” and estimates that worldwide wheat production will “fall by 6% for each °C of further temperature increase.” The study’s basic physical argument is that higher temperatures accelerate plant maturation, allowing fewer days for biomass accumulation and, thus, reducing yields.

The researchers acknowledge that “improvements in technology and management have led to increasing yields around the world.” Nonetheless, they contend, “wheat model simulations over the main global wheat-producing regions can isolate the climate signal by holding inputs and management constant with the exception of climate information.” Their model ensemble indicates that “Simulated yields declined between 1981 and 2010 (Fig. 2a) at 20 of the 30 representative global locations . . . owing to positive temperature trends over the same period.”

Wheat Simulated Global Yield Change 1981-2010

If I get their meaning, Asseng et al. claim that although global yields increased during 1981-2010, yields at those 20 locations would have been larger absent global warming. They also appear to be saying that absolute yield declines would have occurred at all 30 locations under a +2ºC warming scenario with even steeper declines under a +4ºC warming scenario.

A few observations spring to mind. First, the paper does not discuss Asseng et al.’s method for isolating the climate signal from other factors affecting yields. Climate economist Richard Tol cautions that the “signal” of recent climate change is “faint” and “drowned out by all the other things that have changed.” He elaborates:

If one tries to study the impacts of climate change on crops, for example, one must factor in the impact of new seeds, fertilizers, pesticides, and a host of other confounding variables such as air pollution and atmospheric deposition of nutrients. If one is interested in commercial agriculture, one needs to consider subsidies and international trade.

Second, there has not been much surface warming of the planet in 18 years, so it may be many decades before global average surface temperatures increase by 2ºC or more. The more gradual the rise in global temperatures, the greater the likelihood that management and technology will improve enough to prevent yield loss.

Third, management and technology have, in fact, boosted yields significantly during the current warm period. The world warmed 0.12ºC per decade during 1951-2012, according to the IPCC (AR5 Summary for Policymakers, p. 5), which implies an overall warming of about 0.72ºC. USDA’s Wheat Data Yearbook contains a chart showing, among other data, crop yield (tons per hectare) and total production (millions metric tons) over the 54-year period from 1960 to 2014.

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Regular readers know that this blog long has been a big fan of Platts Energy Week with Bill Loveless, which, sadly, no longer will be filming after tomorrow morning’s show. Indeed, on a regular basis over the last 18 months, I recapped the show’s best interview here on within a day or two of Sunday’s airing. “Invaluable” was my modifier of choice when introducing the program. Wistfully, then, I present my personal favorite five Platts Energy Week segments:

5. Devon Energy Chairman Puts Lie to Claim That Feds Were at Heart of Fracking Breakthrough (episode 8/4/13)

In early August, 2013, Bill Loveless interviewed Larry Nichols, executive chairman of Devon Energy; the topic was the legacy of George Mitchell, the relentless entrepreneur who perfected breakthroughs in drilling technology, collectively known as fracking, that unleashed an American energy renaissance. Mitchell had died on July 26th. In the early aughts, Devon invested in Mitchell’s ideas, and together they pioneered and deployed the new technologies. The highlight of the interview is when Mr. Nichols puts the lie to the mistaken contention that federal support was the sine qua non of the fracking breakthrough.


4. Any Segment with Bobby McMahon (episodes 7/19/14, 12/7/14, 4/20/14) [click to continue…]

Currently, ecoblog Grist is featuring a post (“Love and Long Distance Travel in the Time of Climate Change“) about one person’s ethical quandary over whether to fly home for the holidays more than once, due to the attendant egregious greenhouse gas emissions. The writer lives in Seattle; her family resides in Pittsburgh. Between the two cities, each round trip would contribute .57 tons of CO2 to runaway, catastrophic, apocalyptic global warming, according to the Flight Carbon Footprint Calculator. She ultimately chose to make one flight, having concluded that the consequences of two flights are far too dire…

…At the very same time, Grist is holding a fundraiser “sweepstakes,” for which the grand prize includes “a voucher valued at two thousand dollars ($2,000) to be used toward airfare [for two] to San Jose, Costa Rica.” The carbon footprint of a Seattle-San Jose round trip is .87 tons CO2. For two, that’s 1.74 tons—or about 40 % of the global per capita annual average.

This apparent contradiction in things Grist brings to mind one of my all time favorite statistics. In 2008, a class at MIT calculated that the absolute floor for an American’s annual carbon footprint—even that of a homeless, ascetic monk—is 8.5 tons per person, more than twice the global average. [click to continue…]

Reports Rasmussen Reports:

Fewer voters than ever have a favorable opinion of the Environmental Protection Agency, and a plurality say that its regulations and actions hurt the economy. 

A new Rasmussen Reports national telephone survey finds that 32% of Likely U.S. Voters have a favorable opinion of the EPA, the lowest finding in the three years the question has been asked.

I’m not shocked. [click to continue…]

Over at Grist, Ben Adler repackaged press releases from Sierra Club and NRDC into a story about the supposed leniency of EPA’s final coal ash rule, a pre publication version of which was issued last Friday. Of course, retransmitting pressers by environmental special interests is nothing new for Grist’s brand of “independent green journalism.” And if the author had limited himself to parroting green groups, I’d have no reason to post. But in the second half of his blog entry, Adler took it upon himself to try to do some real reporting, and that’s when he got into trouble. To be precise, he reported on the wrong rule. [click to continue…]

The White House Council on Environmental Quality on 18th December released the second draft version of a guidance document on how federal agencies should consider climate impacts in preparing Environmental Impact Assessments under the National Environmental Policy Act.  The first draft version was released in 2010.  CEQ invited public comments for 60 days.

In keeping with NEPA regulations that require Environmental Impact Statements to consider the direct, indirect, and cumulative environmental impacts of proposed projects and actions, the guidance document recommends that the direct, indirect, and cumulative impacts of greenhouse gas emissions be included in preparing EISs.  This includes “upstream” and “downstream” emissions connected to the project.  Thus a new bridge that would allow the transport of tens of millions of tons of energy-intensive goods over its lifetime could have an enormous carbon footprint.

Reports stated that the guidance document recommends that climate impacts be considered in the NEPA process when any project or action would increase greenhouse gas emissions by at least 25,000 metric tons of carbon dioxide-equivalent annually.

This is not correct. The document states that a quantitative analysis is only necessary when emissions exceed 25,000 tons annually.  Considering the impacts of lower annual emissions is required but does not necessarily require quantification. [click to continue…]