2014

Fossil energy production was a large contributor to fast GDP growth in five states in 2013, the Commerce Department’s Bureau of Economic Analysis (BEA) reports:

Although mining was not a significant contributor to real GDP growth for the nation, it did play a key role in several states. This industry was a large contributor in five of the fastest growing states: North Dakota, Wyoming, West Virginia, Oklahoma, and Colorado. In North Dakota, the fastest growing state in 2013, mining contributed 3.61 percentage points to the state’s 9.7 percent growth in real GDP. By contrast, Alaska was the only state where real GDP decreased in 2013, primarily due to a decline in mining that resulted from lower output on the state’s North Slope.

Okay, the BEA doesn’t actually say “fossil energy production” and instead uses the less descriptive term “mining.” But what’s mostly ‘mined’ in those states is fossil fuels:

• Among oil producing states, North Dakota, Alaska, and Oklahoma rank 2nd, 4th, and 5th, respectively. GDP declined in Alaska because oil production declined.
• Among gas producing states, Wyoming, Oklahoma, and Colorado rank 3rd, 4th, and 5th, respectively.
• Among coal producing states, West Virginia and Wyoming rank 1st and 2nd, respectively.

For more detail (albeit with somewhat dated info), see EIA charts and table below the break.

Note, too, 2013 GDP growth was strong in Texas (3.7%), the nation’s top oil and gas producing state, and also strong in Utah (3.8%), a state with significant coal and gas production. Idaho was the only non-fossil energy producing state with fast GDP growth (4.1%) in 2013.

At the risk of belaboring the obvious, policies promoted by the Obama administration and/or its allies — carbon taxes, cap-and-trade, drilling/fracking moratoria, energy export bans — are designed to suppress or even ban fossil energy production.

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EPA’s carbon “pollution” rule for existing power plants, dubbed the Clean Power Plan, requires states, on average, to reduce power-sector carbon dioxide (CO2) emissions 30% below 2005 levels by 2030.

EPA’s Regulatory Impact Analysis projects significant incremental annual compliance costs — $7.3 billion to $8.8 billion in 2030 (RIA ES-7) — but also much larger air quality and climate benefits. EPA’s Clean Power Plan “By the Numbers” Fact Sheet estimates the public health and climate benefits at $55 billion to $93 billion. The RIA projects net benefits of $46 billion to $84 billion in 2030 (RIA ES-23).

Reductions in premature fatalities attributed to coincidental reductions in ozone and fine particulate (MP2.5) pollution account for more than 90% of the estimated $23 billion to $59 billion in health benefits in 2030 (RIA ES-22). Those gigantic air quality “co-benefits” should be taken with several handfuls of salt.

Claims that PM2.5 pollution currently kills thousands of Americans annually are based on cherry-picked studies and extrapolation of health effects below the lowest PM2.5 concentrations associated with mortality in epidemiological studies. Such claims also conflict with toxicological studies, which indicate that current PM2.5 concentrations in U.S. cities are too low to cause significant disease or death.

As for ozone pollution, the rule’s purported health benefits are even less plausible, since asthma prevalence — especially childhood asthma rates — increased since 1980 while ozone concentrations declined by 25%.* The Clean Power Rule will reduce ozone precursor emissions chiefly by forcing states to shift base load generation from coal to natural gas. But the state with the worst ozone pollution is California, which obtains only 0.4% of its electricity from coal.

Those are my preliminary reactions to the rule’s co-benefit claims. I turn now to the main topic of this post — whether the rule’s alleged climate benefits justify the estimated costs.

EPA estimates that in 2030 the rule will deliver climate benefits of $9.5 billion to $94 billion, with a mid-range estimate of $31 billion (RIA ES-23). This seems to suggest that, just as the rule will impose $7.3 billion to $8.8 billion in compliance costs on the power sector in 2030, it will also spare Americans tens of billions of dollars in climate change damages in the same time frame.

Obama administration officials are only too happy to foster that impression. When announcing the rule, EPA Administrator Gina McCarthy said:

In 2030, the Clean Power Plan will deliver climate and health benefits of up to $90 billion dollars. And for soot and smog reductions alone, that means for every dollar we invest in the plan, families will see $7 dollars in health benefits.

Implication: U.S. climate benefits (CO2-related damages avoided) in 2030 will exceed $30 billion.* That is nonsense for three reasons. [click to continue…]

In today’s Federal Register, the EPA finalized its 50^th regulatory takeover of a state Clean Air Act program, also known as a Federal Implementation Plan (“FIP”). Today, the victim was Washington. To be precise, the agency imposed visibility improvement requirements, known as Regional Haze, on a refinery and two aluminum manufacturing plants in the Evergreen State. While compliance costs are minimal for this particular regulatory takeover, the unfortunate effect of today’s action is to subject three sources to the purview of a Clean Air Act regulatory regime against the wishes of the State, and for no discernible environmental improvement. Below, I’ve provided an ongoing analysis compiled by globalwarming.org, of Clean Air Act FIPs rendered by each of the last four Presidents. As is rendered clear by the chart, President Obama has taken a very different view of Clean Air Act cooperative federalism than has his predecessors. Evidently, Obama’s is the age of uncooperative federalism.

In a recent influential article in the Energy Law Journal, former FERC General Counsel William Scherman made a number of bombshell claims regarding what he and two co-authors described as the “lop-sided and unfair” FERC enforcement process. If true, these allegations raise troubling concerns about the absence of due process at FERC’s Office of Enforcement, including a putative practice of withholding exculpatory evidence from investigation subjects.

Unsurprisingly, the law review article has figured prominently in the confirmation process for President Obama’s nominee for FERC chair, Norman Bay, who has served as the head of FERC’s Office of Enforcement since 2009 and was, therefore, at the center of the allegations. During Bay’s May 20^th confirmation hearing, Bay was questioned about Scherman’s law review article by Senator John Barrasso. In response, Bay said that he would be “very concerned” about the article, but only if it is true. And in follow-up, written responses to questions from Barrasso, which I’ve excerpted below the break, Bay states that none of the allegations in the law review article are true.

So, a prominent person is lying. Either former FERC General Counsel William Scherman is telling fibs about FERC’s Office of Enforcement, or current FERC chair nominee Norman Bay is being duplicitous in rebutting the allegations. Given the gravity of the charges leveled in the law review article, I’d want to find out who’s lying before I supported Norman Bay’s nomination, if I were a Senator.

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America’s electric grid is undergoing unprecedented changes that could threaten reliability in discrete markets. This was the take-away lesson from the Federal Energy Regulatory Commission’s annual reliability conference in Washington, D.C. yesterday. To watch an archived webcast of the conference, or read participant testimonies, click here.

The challenges facing the grid are many:

• Due to breakthroughs in drilling, natural gas is historically cheap. Gas, in turn, is the benchmark that sets wholesale electricity rates. With prices depressed,  utilities and independent power producers have retired almost 4,000 megawatts of nuclear power, due primarily to nuclear power’s relatively high operating costs, although Clean Water Act compliance costs contributed to these decisions.

• At the same time, the EPA is waging a war on coal,  which, when combined with depressed prices, has lead to the retirement of 22,000 megawatts of coal-fired electricity. Due to one egregious regulation, known as the Utility MACT, many thousands more megawatts of coal-fired electricity will retire next spring.

• Gas has been filling the void left by coal and nuclear retirements. Gas fired generation capacity has increased to now represent more than 40 percent of total capacity in North America, an increase from under 30 percent as recent as five years ago. This presents challenges unto itself, because the natural gas pipeline system wasn’t built to accommodate electricity production. The ensuing bottlenecks can have reliability impacts. This was a major lesson from last winter’s polar vortex.

• Finally, the enactment of green energy production quotas in 30 States has resulted in widespread use of intermittent renewable energy sources like solar and wind energy. Because the power supplied to the grid must be balanced carefully with power consumed from the grid, the unreliable nature of green energy presents engineering challenges.

Into this milieu will be thrust FERC’s next chair to succeed Jon Wellinghoff, whose term ended last November. FERC’s role in protecting the grid’s reliability stems from an amorphous mandate in the 2005 Energy Policy Act. In fact, FERC has limited power to effectuate policy that impacts reliability; however, in practice, the commission can perform a vital role as an information clearinghouse and a source of expertise. The chair, moreover, has a bully pulpit. Ideally, he or she would also act as the grown up in the room when EPA contemplates politicized regulations with broad consequences for the electricity sector.

The President’s first pick for the job was Ron Binz, whose nomination was scuttled by the Senate Energy and Natural Resources (ENR) Committee when it became apparent that he was an opponent of all forms of conventional energy.

For his second pick, the President chose Norman Bay. And again, the President took the highly unusual step of nominating someone for FERC chair who isn’t a currently serving commissioner. Instead, Bay comes from FERC’s Office of Enforcement. Bay’s confirmation hearing before the Senate ENR Committee took place on May 20^th (webcast here). As a former prosecutor, it should come as no surprise that he was adept at handling questions in person. However, in answers to follow up written questions, Bay raises serious red flags about whether he’s an appropriate pick for chair, especially in light of the tumult within the electric sector.

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Back in January, in the midst of one incredibly cold winter, John Holdren, Director of the White House Office of Science and Technology Policy, posted a short video on the agency’s website entitled The Polar Vortex Explained in 2 Minutes.  In that video, Holdren claimed that a “growing body of evidence suggests that the kind of extreme cold being experienced by much of the United States as we speak is a pattern that we can expect to see with increasing frequency as global warming continues.”  In short, global warming was responsible for colder winters.

This, of course, would be yet another step towards galactic nonverifiability—If global warming is responsible for everything, it can be never be tested empirically.

But as a number of climate scientists soon pointed out, Holdren’s claim of a growing body of evidence on this issue was simply false.  In fact, from September 2013 on, three peer-reviewed studies appeared debunking the notion that polar warming had led to an increase in what are known as winter blocking episodes—situations where extremely low temperatures become locked in for exceptionally long periods of time.  That was why, in April, we filed a formal request for correction with OSTP under what’s known as the federal Data Quality Act.

After we filed our petition , by the way, yet a fourth study appeared disputing the global warming/polar vortex connection.

Yesterday, shortly before OSTP’s 90-day deadline for responding to correction requests, we received the agency’s denial (see below).  OSTP claims that Holdren was simply expressing his “personal opinion” rather than any “comprehensive review of the scientific literature”.

On its face, this response is shovel-ready nonsense.  Holdren, and others at OSTP who parroted his claim, at no point suggested that they were speaking personally rather than as agency employees.  To the contrary, they employed both the agency’s resources and stature to disseminate the polar vortex claim.

More importantly, the specific contention—of a “growing body of evidence”—can be tested by any kindergartner.  Four recent studies on this issue all contradict the global warming/polar vortex connection, more than countering the older studies that support Holdren—that at least balances, and more likely outweighs, whatever Holdren was relying on.  And the notion that the body of evidence supporting him is growing is nonsense.

If Holdren were selling pizza, the FTC would’ve been all over him long ago.