Marlo Lewis

Post image for IER Study: Existing Coal Much Less Costly than New Gas, Wind

 

The Institute for Energy Research (IER) has published a first of a kind study on the levelized cost of electricity from existing power plants. Although not discussed as such, the report corroborates concerns that EPA’s Clean Power Plan would significantly increase electricity prices by replacing low-cost existing coal generation with more costly new generation from natural gas and wind.

How much more costly? The authors, Tom Stacy and George Taylor, estimate that new natural gas combined cycle (NGCC) costs about twice as much as existing coal and new wind costs about three times as much.

IER levelized cost existing coal vs new natural gas new wind June 2015

 

 

 

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Post image for EPA’s Climate Action Flim-Flam Report

 

 

EPA last week released Climate Change in the United States: Benefits of Global Action. As summarized by the agency’s press release, the 96-page report “compares two future scenarios”:

a future with significant global action on climate change, where global warming [in 2100] has been limited to 2 degrees Celsius (3.6 degrees Fahrenheit), and a future with no action on climate change (where global temperatures rise 9 degrees Fahrenheit). The report then quantifies the differences in health, infrastructure and ecosystem impacts under the two scenarios, producing estimates of the costs of inaction and the benefits of reducing global GHG emissions.

The report has five main sections (health, infrastructure, electricity, water resources, agricultural and forestry, and ecosystems). At the end of each section, EPA cites to an underlying technical study. I may examine one or more of those in a later post. Here I will point out a few tricks EPA uses to make its case.

The core bias that predetermines all the alarming forecasts in EPA’s report is the assumption that, in the reference (“no action”) scenario, global temperatures will increase by 9°F (5°C) between 2010 and 2100 (the red line in the chart below).

EPA CIRA Global Temperatures References vs Mitigation

 

 

 

 

 

 

 

 

Average U.S. temperatures are projected to rise even higher. In the reference scenario, EPA projects a 14ºF increase above present temperatures in the Mountain West and a 12°F increase in the northern regions. In contrast, temperatures rise no more than 4ºF in any state under the “global action” scenario.

EPA CIRA US Temperatures References vs Mitigation

 

 

 

 

Unsurprisingly, in EPA’s assessment, unmitigated warming produces terrible and terrifying climate impacts whereas “global action” reduces such impacts to manageable and non-threatening levels. For example, EPA claims significant global action would reduce U.S. urban heat-related mortality by 93% in 2100, saving approximately 12,000 lives in that year.

EPA CIRA US Urban Heat Related Morality Reference vs Mitigation

 

 

 

 

 

 

 

 

 

How reasonable is it, though, to suppose that average global temperatures in 2100 will be 9°F higher than they are today? Not very. [click to continue…]

Post image for Computer-Aided Sophistry: My Power Point on the Social Cost of Carbon

Today I participated in a panel discussion at the Heritage Foundation titled “Social Cost of Carbon: A Controversial Tool for Misguided Policy.” Heritage Foundation economist David Kreutzer moderated the panel. He also introduced Senate Environment and Public Works Committee Chairman Jim Inhofe (R-Okla.), who spoke on climate science and policy for about 20 minutes before the panel began. Cato Institute scientist Patrick Michaels and Heritage Foundation economist Kevin Dayaratna also gave presentations as panelists.

To watch the entire event, click on http://www.heritage.org/events/2015/06/carbon

My Power Point presentation includes a lot of material I did not have time to cover. So I am posting it here.

My argument may summarized as follows:

  1. Social Cost of Carbon — the cumulative damage allegedly inflicted by an incremental ton of carbon dioxide emitted in a particular year — is an unknown quantity, discernible in neither meteorological nor economic data.
  2. The SCC is a product of speculative climatology combined with speculative economics. By fiddling with inputs in complex computer models, SCC analysts can get just about any result they desire.
  3. What EPA and climate campaigners desire are ever-bigger SCC values to justify ever-more costly anti-carbon taxes and regulations.
  4. However interesting as an academic exercise, when used to guide policy, SCC analysis is computer-aided sophistry. Its political function is to make renewable energy look like a bargain at any price and make fossil fuels look unaffordable no matter how cheap.
  5. Even if SCC analysis were an exact science, it would still be biased unless paired with rigorous assessment of the social benefits of carbon energy and the social costs of carbon mitigation. It never is.
  6. The economic and social costs of carbon mitigation in all likelihood greatly exceed the social costs of carbon.

 

Post image for Does EPA’s Clean Power Plan Endanger Manatees?

 

The law of unintended consequences is a harsh mistress. The Clean Power Plan (CPP), a policy touted by EPA and others as mitigating climate change impacts on species, imperils the Florida manatee, a species listed as endangered under the Endangered Species Act (ESA).

To grasp the CPP threat to manatees, one does not need complex computer models or a Ph.D. in climate science. Cold stress is a leading killer of manatees. Coal power plants discharge heated water that keeps marine environments comfortably warm where thousands of manatees live (or rather, thousands congregate where power stations warm the surrounding waters). The CPP is a strategy to put the kibosh on coal generation. QED.

Manatees Florida Power and Light

Photo: Manatee refuge courtesy of Florida Light and Power

House Natural Resources Chairman Rob Bishop (R-UT) and Senate Environment and Public Works Chairman Jim Inhofe (R-OK) spell out the CPP threat to manatees in a letter sent yesterday to EPA administrator Gina McCarthy. Because EPA failed to consult with the Fish & Wildlife Service about potential impacts of the CPP on manatees, the lawmakers conclude that the CPP flouts EPA’s obligations under section 7 of the ESA. [click to continue…]

Post image for Renewable Fuel Standard: Can EPA Regulate America Beyond the ‘Blend Wall’?

American Fuel and Petrochemical Manufacturers (AFPM) has released four fact sheets on EPA’s proposed Renewable Fuel Standards (RFS) for 2014, 2015, and 2016, and the biomass-based diesel standard for 2017:

Today’s post discusses two key points developed in the Fact Sheets:

  • The Blend Wall — the practical limit on how much biofuel can actually be sold in a given year — is EPA’s chief reason for exercising its authority to adjust the statutory RFS blending targets for 2014-2016. However, EPA plans to breach the blend wall in 2016.
  • In conceptualizing how the blend wall may be breached, EPA drastically overestimates how much biofuel can be sold as E85 (motor fuel blended with up to 85% ethanol).

First, some quick background on the RFS and EPA’s proposal. [click to continue…]

Post image for EPA’s Renewable Fuel Standard Proposal Ignores Root Cause of Blend Wall

 

EPA today proposed Renewable Fuel Standard (RFS) biofuel blending targets for 2014, 2015, and 2016. The agency expects to complete the rulemaking by Nov. 30, which means it will be two years late finalizing the 2014 targets and one year late finalizing the 2015 targets.

The 2007 Energy Independence and Security Act (EISA), which established the RFS program in its current form, mandates that refiners, blenders, and fuel importers increase the amount of biofuel sold in the nation’s motor fuel supply from 4 billion gallons in 2006 to 36 billion gallons in 2022. However, EISA also authorizes EPA to adjust the annual targets if “there is an inadequate domestic supply,” broadly defined by the agency to include all infrastructure, market, and legal constraints “that could result in an inadequate supply of renewable fuel to the ultimate consumers.”

In Nov. 2013, EPA concluded that the 2014 RFS mandate would exceed the “blend wall” — the maximum quantity of ethanol that can be sold in a given year. The blend wall is a product of two factors: the overall size of the motor fuel market and practical constraints on how much ethanol can be blended into each gallon of motor fuel sold. Warranty and liability concerns, lack of compatible fueling infrastructure, and, most importantly, anemic consumer demand, effectively limit the standard blend to E10 — motor fuel containing up to 10% ethanol.

Based on blend-wall arithmetic, EPA in Nov. 2013 proposed to trim the overall 2014 statutory target from 18.15 billion gallons to 15.21 billion gallons — a 16% cut. That sparked a firestorm of protest from biofuel interests, and EPA has been dithering over the targets ever since – until today.

EPA’s proposal gets mixed reviews from biofuel lobbyists. On the one hand, the targets are lower than the corresponding EISA targets.

EPA RFS EISA Statutory Targets, May 29, 2015

 

 

EPA RFS Proposal May 29, 2015

 

 

On the other hand, the proposed target for 2016 will exceed the E10 blend wall by about 840 million gallons (p. 58). It is important to biofuel producers that all ethanol produced actually be sold for use as motor fuel. Otherwise, supply will exceed demand, and the ensuing glut will depress biofuel prices.

EPA assumes up to 600 million of those gallons can be sold via increased sales of E85 – motor fuel blended with up to 85% ethanol (p. 60). In a coordinated move, the USDA yesterday announced plans to spend $100 million to subsidize installation of E85 blender pumps.

My best guess is that in 2017 (or sooner) the blend wall crisis will return.

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Post image for Will EPA Scrap the Carbon Capture Mandate?

 

“EPA appears to have dropped its controversial requirement that new coal plants install partial carbon capture and sequestration (CCS) from its draft final new source performance standards (NSPS) that it recently sent to the White House for interagency review, according to one informed source,” Dawn Reeves reported last week in InsideEPA ($).

Despite repeated trust-us-we’re-the-experts assurances that partial CCS is the “adequately demonstrated” (i.e. commercially viable) “best system” for controlling carbon dioxide (CO2) emissions from new coal-fired power plants, EPA apparently realizes such claims won’t survive judicial scrutiny (as this blog has often argued). According to Reeves:

The source believes EPA decided to drop the CCS mandate in the face of growing legal concern that the technology requirement would not withstand court review, because the projects the agency had relied on to show that CCS is “adequately demonstrated” and “commercially available” are faltering.

Reeves further notes that: 

A final NSPS must be in place in order for EPA to go forward with its final existing source performance standards (ESPS) to cut greenhouse gas (GHG) emissions from the current power fleet — a rule that the agency also plans to complete this summer and one that would achieve far more emissions reductions than the NSPS, particularly because there are no new coal plants planned in the U.S.

In EPA parlance, the agency’s Carbon Pollution Standards rule for new power plants imperils its Clean Power Plan (CPP) rule for existing power plants.

What will the White House do? President Obama’s longstanding ambition is to “bankrupt” anyone who would build a new coal-fired power plant. The NSPS rule is a de-facto ban on new coal generation, because new natural gas combined cycle (NGCC) power plants are already cheaper to build than new coal-fired power plants, and CCS can more than double the cost of a new coal plant.

Nonetheless, because hardly anyone is building new coal power plants anyway, the NSPS rule’s chief function is to provide a regulatory stepping stone to establish CO2 performance standards for existing power plants.

For Obama and his environmentalist allies, the CPP must be protected at all cost. They view it as vital to the triumph of ‘progressive’ politics in two ways. First, the CPP itransformational – a strategy to impose California-style climate and energy policies on the nation as a whole. Second, the CPP makes up the biggest component of the U.S. Government’s emission reduction pledge in the COP 21 climate treaty negotiations.

Simply put, an imploding Carbon Pollution Standards rule would take the CPP down with it, which in turn would likely doom the forthcoming Paris conference to another Copenhagen-like failure.

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Post image for EU Climate Policy: Unsustainability Update

 

Back in March, this blog showcased two charts exposing the unsustainability of the European Union’s proposal, in the current round of climate treaty negotiations, to cap global carbon dioxide-equivalent (CO2e) greenhouse gas (GHG) emissions at 60% below 2010 levels by 2050. The charts were created by U.S. Chamber of Commerce VP for climate and technology Stephen Eule, based on his preliminary assessment of the scale of effort required to meet the EU 60-by-50 target.

Yesterday, Eule posted a commentary with updated versions of the charts. The first updated chart appears immediately below.

Eule 60-by-50-global May 2015

 

 

 

 

 

 

The EU proposal clearly requires a rapid reversal of the baseline emissions trajectory projected by the Organization for Economic Cooperation and Development’s (OECD) Environmental Outlook to 2050. Under current climate and energy policies, global emissions are projected to increase by 67% between 2010 and 2050. To reduce emissions 60% below 2010 levels, emissions must decline a whopping 76% below the baseline projection. Eule comments:

So reaching “60-by-50″ is not as simple as just cutting 2010 emissions by 29 gigatons, which would be a huge task in and of itself. It also means avoiding more than 30 gigatons of future emissions, some of which have already happened. This is a staggering amount, equivalent to eliminating total U.S. GHG emissions every 3.8 years between now and 2050.

What must industrial and developing countries do, respectively, to meet the 60-by-50 target? That’s the topic of Eule second updated chart.

Eule 60-by-50-country May 2015

 

 

 

 

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Post image for Tom Steyer’s Windfall Profits Tax: Recyling Junk Policy

“Billionaire environmental activist Tom Steyer said Friday that he’s considering putting an oil-extraction tax on next year’s California ballot, increasing pressure on refiners amid a surge in gasoline prices and possibly raising the stakes on his climate change crusade,” reports The Sacramento Bee. The article continues:

Steyer, standing in front of a chart illustrating the recent price rise at the gas pump, said he may link a tax proposal with the requirement that oil companies disclose more information about their supplies and prices. . . . “There’s a huge human justice issue here about whether hardworking Californians are paying way too much for gasoline and the companies are being able to manipulate it . . . and triple their profits,” Steyer told reporters at the California Democratic Party convention in Anaheim, where he plans to meet with delegates and other officials to gather input. . . . California is one of 22 oil-producing states that don’t charge an oil-extraction tax. A 10 percent excise tax would raise about $2 billion annually.

Although conspiracy theories are typically worth less than squat, I must nonetheless comment briefly on the recent rise in gas prices, because Steyer has what it takes to get Democratic pols singing from the same sheet of music.

Nationally, the price of regular gasoline has rebounded from $2.06/gal. in January to $2.72/gal. today. Before concluding that dark forces must be at work, consider a few points:

  • Gas is still a dollar cheaper than it was in May 2014.
  • Gas prices tend to rise every year after January as refineries switch over from winter to summer gas, which is more costly to produce, and as demand increases with the onset of summer driving season.
  • “[R]obust U.S. gasoline consumption and exports, and increased demand for gasoline in Europe and Asia” are factors pushing up current prices, according to the U.S. Energy Information Administration.
  • The Federal Trade Commission hasn’t said a peep lately about unlawful market manipulation.

But here’s the thesis I would submit for your consideration. Steyer is a false foe of high gas prices. His proposed excise tax would squeeze the “hardworking Californians” about whom he professes to care.

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Post image for Ethanol Industry Ad Campaign: Fuels America or Fools America?

 

As the June 1 deadline approaches for EPA to propose Renewable Fuel Standard (RFS) mandates for 2014, 2015, and 2016, biofuel lobbyists are cranking up their political and PR efforts to sway EPA’s decision. In a television and digital ad campaign launched this week, Fuels America, a coalition of biofuel interests, accuses the “oil industry” of “refusing to fulfill its obligations” under the RFS.

Fuels America also claims EPA must choose either to support “rural economies,” “permanent jobs,” and “the world’s cleanest motor fuels,” or to “reward” the oil industry, which supposedly means “more imported oil from hostile foreign regions, more pollution and spills,” “fewer American jobs,” “protecting the oil monopoly on our fuel supply,” and “even higher gas prices.”

Fools America is a much better description of what these regulatory profiteers are trying to pull off. The RFS does not benefit “rural economies,” it benefits corn farmers at the expense of beef, poultry, and hog farmers. The RFS creates “permanent” jobs only in the sense that it creates special privileges in the form of government-guaranteed market shares for biofuel companies and the corn farmers who supply them. A “monopoly” is a market with a single supplier; a commodity such as a fuel type cannot be a monopoly. Gas prices and oil imports from hostile regions are at their lowest levels in a decade, thanks chiefly to the fracking revolution and U.S. oil companies, not RFS blending requirements.

As for the RFS producing the world’s “cleanest” fuels, the program has significant environmental downsides. It expands aquatic dead zones, accelerates wetlands conversion and habitat loss, may increase smog-forming VOC emissions, and likely increases net greenhouse gas emissions. The RFS program also inflates food and fuel costs and exacerbates world hungercontributing to political instability and violence in developing countries.

Let’s delve a bit deeper into the controversy over the 2014-2016 ethanol mandates and Fools America’s campaign to influence EPA’s rulemaking.

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