April 2015

A little known document sheds new light on the now 17-year-long controversy over EPA’s Clean Air Act authority with respect to greenhouse gases. The document is a letter of January 26, 1990 from EPA Administrator William Reilly to U.S. Senators. Reilly sets forth the Bush I administration’s reasons for removing greenhouse gas (GHG) regulatory provisions from S. 1630, the Senate version of the Clean Air Act (CAA) Amendments of 1990. Judging by the fact that the Senate later agreed to drop those provisions from the 1990 CAA as enacted, Reilly’s letter would appear to be a key piece of evidence for assessing legislative intent.

Would consideration of the document have altered the Supreme Court’s landmark ruling in Massachusetts v. EPA (2007)? We will never know. What’s hard to fathom is why no party to the case cited the letter. Maybe it was already lost in the mists of time.

Reilly apprises Senators that the Bush I administration “strongly opposes” S. 1630’s “requirement for reductions in carbon dioxide (CO2) emissions from auto tailpipes” — the same basic policy petitioners in Massachusetts would later sue EPA to adopt. Noting that the S. 1630 CO2 emission standards translate into motor vehicle mileage standards, Reilly highlights three reasons for striking the provision, two of which are germane to issues debated in Massachusetts:

First, it is premature to mandate specific controls to address global warming. International studies are underway. International negotiations on a framework convention on global climate change are scheduled for this year and should be completed prior to unilateral U.S. action. 

Second, fuel-economy requirements raise important non-environmental questions that need to be carefully considered, such as feasibility, cost and competitiveness of the U.S. auto industry with foreign manufacturers.

In addition, Reilly contends, the CO2 standards and provisions to regulate ozone-depleting substances based on global warming potential do not “appear to be a particularly effective approach to such a geographically vast problem.”

In Massachusetts, States and environmental groups challenged Bush II EPA’s rejection of a petition to establish motor vehicle emission standards for CO2 and other GHGs. EPA air chief Jeff Holmstead based the agency’s decision on both statutory and policy grounds (68 FR 52922-52933). The Court dismissed the latter arguments as “policy concerns,”  “policy judgments,” and “reasoning divorced from the statutory text.” However, some of Holmstead’s policy reasons for not regulating GHGs under the CAA reprise Reilly’s reasons for keeping GHG regulatory provisions out of the CAA. Specifically, according to Holmstead:

• Double regulation of fuel economy under both the Energy Policy Conservation Act and CAA could adversely affect U.S. auto industry competitiveness.
• Scientific uncertainties and lack of cost-effective technologies make GHG emission standards “inappropriate at this time.”
• Setting GHG motor vehicle standards would “result in an inefficient, piecemeal approach to addressing the climate change issue.”

Far from being “divorced” from the statutory text, similar policy concerns shaped the text of the statute that the 101st Congress passed and President G.H.W. Bush signed.

Why is this old news important? The extent of EPA’s powers with respect to GHGs is the central issue in the controversy over EPA’s Clean Power Plan (CPP). Although the CPP would be unlawful on numerous grounds even if Massachusetts spoke the gospel truth, courts with a healthy skepticism about that decision are more likely to review the CPP without fear or favor.

Previous commentary on this blog and elsewhere (here, here, here, and here) examines the Massachusetts Court’s reasoning. The remainder of today’s post summarizes that commentary. [click to continue…]

Yesterday, during a speech at the Columbia University Center for Global Energy, EPA Administrator Gina McCarthy articulated a disturbingly expansive view of the agency’s authority. Here’s what she said:

My main point is that a low carbon future is absolutely inevitable … Our role [EPA’s] is to look at the transition that is happening in the energy world, and instead of running against the tide, let’s put some wind in those sails! Let’s put a marker down about what investments should happen if we can all agree that a low carbon future is essential to pursue … America is already bullish on clean energy and the low carbon economy. That is my argument. That is what money and investments are telling me. And EPA simply wants to send the right signal, so [American industry] can feel sure, when they double down, it can be profitable to them.

According to Administrator McCarthy, EPA’s “role” is to decide what investments in the energy industry “should happen,” in order to ensure that such investments will be “profitable.”

This is an amazing statement, in a terrible way. EPA, of course, is a creature of Congress. When did Congress delegate to the agency the power dictate how a trillion dollar sector of the economy should render its investments? Or empower EPA to pick and choose which industries should be profitable?

Moreover, McCarthy’s claimed authority doesn’t make any sense. Why would such responsibilities reside in the office of federal environmental regulators at the EPA, rather than the Federal Energy Regulatory Commission or the Department of Energy?

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Saturday evening, at the ultra-pretentious White House Correspondents’ Dinner, President Obama took congressional Republicans to task for blocking his climate agenda. Vox’s Ezra Klein & Climate Progress’s Joe Romm loved the president’s routine, which they believed to entail the delivery of “brutal truths.”

In fact, the joke is on Klein and Romm, who’ve been duped by O’s duplicitous and disingenuous climate stand-up/speech.

For starters, the President misidentified the objects of his scorn. It’s his own caucus, rather than republicans, that’s at the root of his problems. As I’ve explained over and over and over again, opposition to climate policy is robustly bipartisan in both chambers of the U.S. Congress. Indeed, if all issues enjoyed the bipartisan support that does opposition to climate change mitigation policy, then no one would ever whine about D.C. being dysfunctional.

In this manner, Obama’s thesis—the one that is being championed by Klein & Romm—is wrong. But it’s worse than that, for the president is being a giant phony, in addition to his being mistaken.

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The American Enterprise Institute on 22nd April (the 145th birthday of Lenin and 45th Earth Day) held a seminar on “Implementing a Carbon Tax: Practicalities and Prospects.”  A video of part of the event can be viewed here. The rest of the event can be viewed on the web site of a group promoting a carbon tax and headed by former Representative Bob (“Mr. 70-29”) Inglis (R-SC).

Some of the presentations were based on a collection of essays that grew out of a conference AEI held in 2012.  That book has now been published by Routledge as “Implementing a Carbon Tax: Challenges and Debates.”  For those not lucky enough to have been given a copy at the AEI event, it can be purchased on Amazon for the discounted price of $48.09.

AEI Resident Scholar Aparna Mathur, who was the only AEI scholar to contribute an essay to the book, hosted the event.  The first speaker was Vitor Gaspar, director of the fiscal affairs department at the International Monetary Fund.  He noted several times that getting the price of carbon was crucial and that most existing carbon taxes and cap-and-trade schemes had put the price too low.

Next on the agenda was a discussion with Representative John Delaney (D-Md.) and former Rep. Inglis, head of the Energy and Enterprise Initiative, which is based at George Mason University.  Rep. Delaney used the AEI event to announce that he would soon introduce a carbon tax bill.  The “Tax Pollution, Not Profits” Act will begin with a $30 per metric ton of carbon dioxide and then escalate by 4% above the inflation rate every year.

Delaney said that his bill would use 50% of the revenue to reduce the corporate income tax from 35% to 28%.  Another chunk of revenue would be used to offset the higher energy costs of poorer people.  Finally, some of the revenue would be used to compensate coal miners who lose their jobs by paying for retraining, relocation, early retirement, and health care.  Delaney did not say whether the 4% annual escalator would be used for further reductions in corporate tax rates or higher government spending.

Delaney, who was a successful corporate founder and CEO before his election to Congress in 2012, emphasized that carbon was a massive net drag on the economy and that his bill was a free market solution that would spur economic growth and innovation.  Asked by Evan Lehmann of Greenwire whether his bill also repealed the EPA’s Clean Air Act rules to reduce carbon dioxide emissions, Delaney replied that his bill does not do that.  But he went on to say, “I think it would inevitably lead to that.”  If it’s inevitable, then he should put it in his bill.

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EPA claims the climate benefits of the Clean Power Plan (CPP) could exceed compliance costs by 4 to 1 or more. Specifically, EPA’s Regulatory Impact Analysis (RIA) projects incremental compliance costs of $7.3 billion to $8.8 billion in 2030 (RIA ES-7) and a mid-range climate benefit estimate of $31 billion in the same year (RIA ES-23).

In a previous post, I raised the simple question of how the CPP could possibly deliver multi-billion dollar climate benefits in 2030 when, according to the agency’s own climate model, the CPP would avert less than 0.02ºC of warming by 2100. Such a vanishingly small temperature change would make no practical difference to farmers, coastal communities, or polar bears in 2100. The climate benefits in 2030 would be even more miniscule.

In testimony before the House Oversight Committee, economist Anne Smith of NERA Economic Consulting demolishes the RIA’s climate and air quality benefit estimates. The hearing took place almost two months ago but I somehow missed Smith’s testimony until yesterday. Here’s the main takeaway:

When correctly presented, USEPA’s estimates indicate the present value of CPP [compliance] spending through 2030 will exceed $180 billion while climate benefits are not expected to exceed that cost until about 100 to 125 years after the spending has been sunk.

Indeed, Smith’s unpacking of EPA’s numbers reveals that for the United States, CPP costs will exceed climate benefits all the way out to the year 2300. [click to continue…]

Would a victory for the State and industry petitioners who are challenging EPA’s Clean Power Plan “overthrow” the “structure” of the Clean Air Act and punch a “gaping hole” in public protections from dangerous air pollution?

That’s what EPA and environmental intervenors contend in Murray Energy v. EPA, a case on which the D.C. Circuit Court of Appeals heard oral argument (audio files 14-1146 & 14-1112) last Thursday. They are peddling nonsense, as will be shown presently.

Moreover, if EPA and its allies were serious about either safeguarding statutory structure or ‘saving the Planet,’ the centerpiece of their agenda would be a proposal to establish national ambient air quality standards (NAAQS) for greenhouse gases, not, as in the Clean Power Plan, carbon dioxide (CO2) performance standards for existing power plants. At EPA, politics trumps both law and climate “action.” [click to continue…]

On Tuesday morning, EPA Office of Air and Radiation chief testified before a House Energy and Commerce subcommittee on draft legislation that would allow States to “opt out” of the Clean Power Plan.

McCabe did not acquit herself well. Unlike her boss, she is not adept at the black arts of congressional testimony. Instead of smooth obfuscation, McCabe all too often goes off script, as was evident on Tuesday.

I noted one of her flubs yesterday; with this post, I’d like to draw your attention to another. When pressed by Rep. David McKinley (R-West Virginia) on the costs of the regulation to his constituents, McCabe replied with the incredible claim that the Clean Power Plan would decrease, rather than increase, utility bills. I’ve excerpted their exchange immediately below.

OAR Chief Janet McCabe: Given the way the industry is going, in terms of employing energy efficiency, we lay out that our proposal will lead to lower energy bills by 2030. So energy bills will go down.

Rep. David McKinley: Wait. I want to make sure I’m clear here. You say energy prices will go down?

OAR Chief Janet McCabe: Energy bills will go down.

Rep. David McKinley: How in the world are energy bills going to go down.

OAR Chief Janet McCabe: With energy efficiency, people will be buying less electricity.

Rep. David McKinley: Are you serious? You really believe this?

OAR Chief Janet McCabe: I do. We’re seeing it all across the country. We’re seeing it in places like New England, where they’ve been very aggressive on energy efficiency. If we use less energy, our bills can go down. And our carbon emissions can go down.

To recap: OAR chief Janet McCabe claimed before Congress that the Clean Power Plan would reduce energy bills. Her evidence for this claim was to cite the New England experience.

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“Flexibility” is the crown jewel on the tiara of EPA talking points regarding the Clean Power Plan.

In the real world, the rule is rigid as they come, quite contrary to what EPA purports. As I’ve before explained, “The rule takes all the known means of reducing GHG emissions within the electricity sector, ratchets them up to an impossible degree, calculates the GHG reductions commensurate with each of these measures, and then uses the resultant aggregate emissions reductions to set a state-wide standard.” Of course, EPA can’t admit as much–i.e., that the rule wrings blood from oranges–so instead the agency takes every opportunity (and then some) to trumpet the regulation’s supposed “flexibility.” According to EPA (with ad nauseam repetitiveness), the Clean Power Plan affords states and utilities the “flexibility” to choose any number of policies outside of the four “building blocks” on which the rule’s emissions standards are based.

But here’s the thing: No one at EPA can identify any ersatz building blocks!

Take, for example, EPA Administrator Gina McCarthy’s right-hand official, Office of Air and Radiation chief Janet McCabe.

In late February, McCabe was reduced to “halting, incomplete sentences” when asked by FERC Commissioner Philip Moeller to name alternatives to the policies on which were based the states’ Clean Power Plan targets.

That was almost two full months ago. Having been reportedly startled by FERC Commissioner Moeller’s “flexibility” question, one would imagine that EPA’s McCabe, in the time since, could have identified a significant greenhouse gas reduction strategy that States could use in lieu of the four building blocks (if such a policy actually exists). But she didn’t! Or, rather, she *can’t*.

On Tuesday, McCabe testified before a House Energy and Commerce subpanel, during which she was asked by a friendly lawmaker to elaborate on what EPA means when it says that the Clean Power Plan is “flexible.” Somewhat incredibly, McCabe’s answer was even worse than it was last February. I’ve excerpted text of their exchange below.

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The House Science, Space, and Technology Committee today held a hearing on The President’s UN Climate Pledge–Scientifically Justified or a New Tax on Americans? In diplomatic lingo, the hearing focused on the administration’s “Intended Nationally-Determined Contribution” (INDC) for the December 2015 COP 21 climate conference in Paris. The administration is pledging to reduce U.S. greenhouse gas (GHG) emissions 26%-28% below 2005 levels by 2025.

Four experts testified:

• Dr. Judith Curry, Professor Earth and Atmospheric Sciences, Georgia Institute of Technology
• Hon. Karen Harbert, President and CEO, Institute for 21st Century Energy, U.S. Chamber of Commerce
• Mr. Jake Schmidt, Director International Programs, Natural Resources Defense Council
• Dr. Margo Thorning, Senior Vice President and Chief Economist, American Council on Capital Formation

All the testimonies have summaries, so there’s no need here for an overview. Certain facts and insights presented by the majority witnesses, though, are noteworthy.

Opponents often point out that EPA’s Clean Power Plan, the centerpiece of the administration’s climate policies, is all pain for no gain, imposing multi-billion dollar costs while hypothetically averting less than 0.02°C of global warming and 0.1 inch of sea-level rise by 2100. Curry notes that all the emission reductions in the administration’s INDC would avert only 0.03ºC of warming by 2100, according to EPA’s MAGICC model. And “If climate models are indeed running too hot, then the amount of warming prevented would be even smaller.”

The stock rejoinder is that if America leads other nations will follow, and a truly global climate treaty will produce substantial warming mitigation. Curry counters that even if the treaty achieves the UN IPCC’s most aggressive emission-reduction scenario, called RCP2.6, and even assuming the accuracy of IPCC models that increasingly overshoot observed warming, “the impact on the climate would not be noticeable until the 2nd half of the 21st century.” Thus, “It is not clear exactly what the INDC commitments are expected to accomplish.” In the graph below, RCP8.5 is the ‘business-as-usual’ emissions scenario. The model-estimated range of warming projections in RCP8.5 significantly overlaps the range of warming projections in RCP2.6 from 2010 through 2050.

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