Marlo Lewis

Post image for OMB Should Uphold Proposed Rollback of 2014 Renewable Fuel Standard (RFS) Targets

What follows is my prepared statement for a media conference call I participated in today along with Kristin Sundell,  Director of Policy and Campaigns, Action Aid; fmr. Sen. Wayne Allard, VP for Government Relations, American Motorcycle Association; Nicole Wood, Program Manager, Government Affairs, Boat U.S.; Ben Schreiber, Climate and Energy Program Director, Friends of the Earth; Emily Cassidy, Biofuels Research Analyst, Environmental Working Group; and Nan Swift, Federal Government Affairs Manager, National Taxpayers Union.

Ever since EPA, in November 2013, proposed to cut back the 2014 RFS blending target from 18.15 billion gallons to 15.21 billion gallons, the agency has come under relentless pressure from the corn-ethanol lobby to withdraw the proposal. 

Hints from EPA officials indicate the agency is in retreat. That is unfortunate. The existing 18.15 billion gallon target would compel refiners to buy billions of gallons more ethanol than can actually be sold as E10 (the highest blend compatible with today’s fueling infrastructure, manufacturer liability and warranty policies, and consumer acceptance).  

Refiners would either have to buy what they can’t sell or pay heavy fines and exorbitant prices for blender credits (RINs). Most of those costs would be passed on to consumers at the gas pump. 

The political pressure on EPA to breach the blend wall – and the consequent peril to consumers – will only increase over time as RFS statutory targets ratchet up to 36 billion gallons in 2022.  [click to continue…]

Post image for Senate Finance Committee Hears Testimony on Energy Tax Reform

The experience of the 1970s and 1980s taught us that if a technology is commercially viable, then government support is not needed and if a technology is not commercially viable, no amount of government support will make it so.

Thus concluded MIT scholars Thomas Lee, Ben Ball, Jr. and Richard Tabors in their 1990 book Energy Aftermath, a retrospective on energy policy “blunders” of the 1970s and ’80s. How much mischief might have been averted in recent decades had House and Senate rules required a recitation of those words at the start of every debate on energy policy?

The same pithy, big-picture clarity came through yesterday at the Senate Finance Committee’s hearing on “Reforming America’s Outdated Energy Tax Code.” I commend in particular the testimonies of Heritage Foundation economist David Kreutzer and former Republican Senator Don Nickles of Oklahoma. Below are some excerpts from Sen. Nickles’s testimony. (Subtitles are mine.)

Best Energy Tax Reform Is Pro-Growth, Non-Discriminatory, General Tax Reform

My primary message at that hearing two years ago was that, if you do tax reform correctly, there would be no reason to hold another “energy” tax hearing, because a reformed tax code should treat energy companies and the products they produce just like everybody else. No subsidies, and no penalties. If the tax code you devise encourages investment, lowers the corporate rate, and embraces a simplified territorial system, U.S. energy companies will flourish along with all other companies. [click to continue…]

Post image for EPA to Regulate CO2 Emissions from Aircraft

EPA plans to propose and finalize regulations establishing first-ever carbon dioxide (CO2) emission standards for jet aircraft. The agency recently submitted an Information Paper to the UN’s International Civil Aviation Organization (ICAO) setting out a regulatory timeline. Once again, the Obama administration reads the Clean Air Act (CAA) to require a climate policy never intended or approved by Congress, and undertakes to negotiate an international agreement that likely would not survive a Senate vote on ratification.

A product of creeping Kyotoism, the yet-to-be-proposed rule has been gestating since 2007. From EPA’s Information Paper:

The U.S./EPA is initiating the rulemaking process in response to a petition the U.S./EPA received in December 2007, which requested that U.S./EPA make an endangerment finding for aircraft GHGs [greenhouse gases] and regulate these emissions under §231 of the Clean Air Act (CAA). Petitioner filed a lawsuit in 2010 on this matter, and the D.C. District Court in 2012 ruled that the CAA required U.S./EPA to make a final determination on whether aircraft GHG emissions cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare. U.S./EPA is now moving forward to make a determination regarding aircraft GHG emissions.

CAA §231 requires EPA to establish emission standards for aircraft if the agency determines that “emission of any air pollutant from any aircraft . . . causes, or contributes to, air pollution which may reasonably be anticipated to endanger public health or welfare.” That EPA will make a positive finding of endangerment is a foregone conclusion.

As the Information Paper notes, EPA already determined in December 2009 that greenhouse gas-related “air pollution” from new motor vehicles endangers public health and welfare. Through that action, EPA empowered itself to set de facto fuel economy standards* under CAA §202, poaching regulatory authority delegated by Congress to another agency (the National Highway Traffic Safety Administration) under a separate statute (the Energy Policy and Conservation Act). So EPA will undoubtedly determine that “air pollution” from aircraft GHG emissions warrants a further expansion of the agency’s regulatory power.

The main difference this time round is that EPA will be setting quasi-fuel economy standards for aircraft, even though no existing statute authorizes any agency to prescribe such standards.

The scientific case for endangerment is weaker today than it was five years ago (see, e.g., here, here, here, here, and here). However, courts are deferential to agency expertise and typically decline to adjudicate scientific controversies.

Courts may, however, be more open to scientific pushback if they question the coherence of EPA’s basic reasoning. What follows is a rumination on EPA’s attempt to define “carbon pollution” in its seminal December 2009 endangerment determination. EPA’s definition, in my view, is a conceptual muddle. [click to continue…]

Post image for Rising CO2 Concentrations: No Measureable Impact on Floods, Droughts, and Storms

Climate campaigners and their media allies routinely attribute extreme weather to anthropogenic global warming. Some more cautiously assert that a particular flood, drought, or storm is “consistent” with what global warming “looks like,” insinuating that carbon dioxide (CO2) emissions from fossil-fuel combustion must be to blame.

In Extreme Weather Events: Are They Influenced by Rising CO2 Concentrations?, Craig Idso of the Center for the Study of Carbon Dioxide and Global Change tests such claims against the empirical evidence contained in literally hundreds of studies of floods, droughts, and storms.

Idso looks at studies of extreme weather in numerous countries on several continents during the ~70-year period from the end of WWII to the present, when three-fourths of the increase in atmospheric CO2 concentrations above pre-industrial levels occurred. He also reviews paleo-climatological studies enabling researchers to compare current weather patterns with those occurring centuries and even millennia before the present.

The evidence Idso compiles is overwhelming. Here are the conclusions from the 79-page report’s three main sections: [click to continue…]

A new MIT study implicitly confirms the obvious: EPA’s “carbon pollution rule” — the agency’s proposed carbon dioxide (CO2) emission standards for new fossil-fuel power plants — is a fuel-switching mandate. Whether through miscalulation or design, the rule does not promote investment in new coal generation with carbon capture and storage (CCS) technology. Rather, the rule effectively bans investment in new coal power plants.

The study, “CO2 emission standards and investment in carbon capture,” puts the point more delicately:

First, the impact of the U.S. EPA’s proposed emission standard of 1100 lbs CO2/MWh is most likely to be an acceleration of the ongoing shift of generation from coal to natural gas. An emission standard of this level is unlikely to incentivize investment in coal with CCS, regardless of any stated intentions.

Why does the “carbon pollution” rule block investment in new coal generation? Coal power plants can meet the standard only by installing CCS technology. CCS adds significantly to the cost of coal generation, natural gas combined cycle (NGCC) power plants already comply with EPA’s rule without additional technology or investment, and “even in the absence of the standard, low natural gas prices would favor natural gas-fired generation over coal fired generation.” Thus, “fuel switching, rather than investment in emissions control (i.e., CCS), is the lowest cost compliance strategy.”

The charts below show the cost penalties incurred by installing CCS technology. Both variable O&M costs and overnight capital costs (the full cost of building the plant if paid upfront) increase as the percentage of CO2 capture increases. [click to continue…]

In a new study published in the journal Environometrics, economists Ross McKitrick and Timothy Vogelsang compare climate models and observations over a 55-year span (1958-2012). Observations are from three sets of weather balloon measurements of tropical troposphere temperatures. Those are compared with 57 runs each of 23 CMIP3 models used by the IPCC in its 2007 Fourth Assessment Report (AR4).

In a lengthy post on the Drudge Report Climate Audit, McKitrick explains that the study focuses on the tropical troposphere because “that is where most solar energy enters the climate system, where there is a high concentration of water vapour, and where the strongest feedbacks operate.” The two economists used AR4 climate models because they began the study years ago before a “library” of CMIP5 models used in the IPCC’s Fifth Assessment Report (AR5) was available. (Note: McKitrick plans to update the study using the CMIP5 library.)

The graphic below shows how model projections compare with balloon data in the lower- and mid-troposphere over the observation period.

McKitrick and Vogelsang 2, July 2014









McKitrick and Vogelsang’s paper is 20 pages long and heavy on the math. Here is the bottom line as McKitrick presents it on Drudge Climate Audit: [click to continue…]

Thor 2

“The Obama administration is working to forge a sweeping international climate change agreement to compel nations to cut their planet-warming fossil fuel emissions, but without ratification from Congress,” Coral Davenport reports in the New York Times.

Were you surprised? In domestic climate policy, Team Obama routinely flouts the separation of powers. Their M.O. from day one has been to ‘enact’ regulatory requirements that, if proposed in legislation, would be dead on arrival.

During this year and next, climate negotiators are again trying to work out a successor treaty to the Kyoto Protocol, which expired at the end of 2012. Under the U.S. Constitution, a treaty enters into force only if ratified, and ratification requires the approval of “two-thirds of Senators present.”

Although Democrats control the Senate, a ratification vote on Kyoto II would fail if held today. With Republicans expected to pick up Senate seats in November, the constitutional path to a new climate treaty seems hopelessly blocked.

So, according to Davenport, the Obama administration plans to negotiate an agreement that is not a treaty yet binding in effect:

To sidestep that [two-thirds] requirement, President Obama’s climate negotiators are devising what they call a “politically binding” deal that would “name and shame” countries into cutting their emissions. The deal is likely to face strong objections from Republicans on Capitol Hill and from poor countries around the world, but negotiators say it may be the only realistic path.

The agreement Obama seeks is no mere ‘coalition of the willing.’ Even though not ratified by the Senate, elements of agreement would still be enforceable as a matter of international law. From the NYT article: [click to continue…]

Post image for Social Cost of Carbon: GAO Report Ignores Pro-Regulation Bias

An eight-month investigation conducted by the Government Accountability Office (GAO) finds no flaws in the Obama administration’s interagency process for developing social cost of carbon (SCC) estimates. Remarkably, GAO has “no recommendations” to improve the process.

GAO did not attempt to evaluate the “quality” of the administration’s SCC estimates. Even so, it’s unusual for GAO to review an agency, program, or policy and find no room for improvement.

Not that anyone should expect GAO to confront the inherent flaws of SCC analysis. As previously argued on this blog, carbon’s social cost is an unknown quantity, discernible in neither meteorological nor economic data. SCC estimates are perforce spun out of non-validated climate parameters and made-up social damage functions. Armed with such sophistry, climate campaigners can make renewable energy look like a bargain at any price and fossil fuels look unaffordable no matter how cheap.

But even taking SCC analysis at face value, the administration’s process is biased, and the evidence is right there in GAO’s report.

Before getting down to particulars, let’s recall why this topic matters. The SCC is an estimate of the dollar value of damages allegedly caused by an incremental ton of carbon dioxide (CO2) emitted in a given year. The higher the SCC estimate, the more plausible the claims of Obama administration officials and their allies that the benefits of CO2-reduction policies justify the costs.

The administration’s SCC interagency working group (IWG) has published two reports called technical support documents. SCC estimates in the 2013 TSD are roughly 50% higher than in the 2010 TSD. In just three years, CO2 reductions became 50% more valuable. Amazing!

Social Cost of Carbon 2010 and 2013 Central Estimates Compared, GAO August 2014

EPA, the Department of Energy, and/or the Department of Transportation have used SCC estimates in 68 rulemakings since May 2008, according to GAO (Appendix I). Fossil fuel foes now use SCC analysis to sell everything from carbon taxes to renewable energy mandates to regional cap-and-trade programs to EPA greenhouse gas regulations.

GAO says everything is hunky-dory because the administration “used consensus-based decision making” (several agencies participated), “relied on existing academic literature and models,” and “took steps to disclose limitations and incorporate new information.” Well, of course they did. These folks are professionals; they know how to check the requisite boxes.

Nonetheless, the administration’s process is biased in four ways. In both the 2010 and 2013 TSDs, the IWG:

  1. Inflated the perceived benefit of CO2 reductions to the U.S. economy by providing only higher global SCC values, not lower domestic SCC values, as required by OMB Circular A-4.
  2. Inflated the estimated benefit of CO2 reductions by using only low discount rates (2.5%, 3%, 5%) to estimate the present value of future CO2-related damages, not a 7% discount rate, as also required by OMB Circular A-4.
  3. Inflated the estimated benefit of CO2 reductions by including ‘worse than we thought’ climate impact projections but not ‘better than we feared’ projections.
  4. Inflated the estimated benefit of CO2 reductions by uncritically accepting the IPCC’s 2007 Fourth Assessment Report (AR4) climate sensitivity estimates despite growing evidence that IPCC models are tuned ‘too hot.’

[click to continue…]

Post image for Increase in Reported UK Floods Due to Population Growth, Not Climate Change – Study

For years, University of Colorado Prof. Roger Pielke, Jr. has been demonstrating that damages due to hurricanes are not increasing once economic data are adjusted (‘normalized’) for increases in population, wealth, and the consumer price index.

More people with more valuables at higher prices incur greater combined monetary losses when disaster strikes. There is no “greenhouse signal” in properly-adjusted hurricane loss data — no trend reflecting a potential warming-induced increase in hurricane frequency or power.

Pielke Jr Normalized US Hurricane Damage 1900-2012

Source: R. Pielke, Jr. Normalized U.S.  Hurricane Damages: 1900-2012. The gray bar indicates estimated damages from Hurricane Sandy.

University of Amsterdam Prof. Laurens M. Bouwer reviewed 22 studies of damages from tropical storms, thunder storms, tornados, floods, hail, brushfires, and earthquakes over multiple decades in the U.S., Europe, Asia, Latin America, and Australia. He came to the same conclusion:

The studies show no trends in losses, corrected for changes (increases) in population and capital at risk, that could be attributed to anthropogenic climate change. Therefore, it can be concluded that anthropogenic climate change so far has not had a significant impact on losses from natural disasters.

If that seems counterintuitive, it’s because detection and reporting of extreme weather has increased. The improved density and spatial coverage of monitoring systems coupled with round-the-clock weather news makes extreme weather seem much more common today than it was perceived to be, say, in the 1970s.

Apparent increases in one type of extreme weather — flooding — may have an even simpler explanation: more people living in places where floods occur.

A new study by scientists at the University of Southampton Tyndall Center for Climate Change Studies finds that population growth and urban expansion account for the reported increase in damaging floods in the UK over the past 129 years. In the words of lead author Andrew Stevens, a growing population means “more properties exposed to flooding and more people to report flooding.” [click to continue…]

Guest Post by Dave Juday, commodity market analyst and principal of The Juday Group

“Government mandates like RFS, subsidies, loan guarantees, and investments have not proven any better than the market for developing new energy resources – just much more costly.  It is time to let the market sort things out.”

KiOR, once the darling of the renewable energy world, reported in a filing with the Securities and Exchange Commission (SEC), that it has a net deficit of $629.3 million and said it expects to continue incurring losses for the foreseeable future.  The details of the filing are not shocking; in March of this year KiOR released a statement that it had “substantial doubts about our ability to continue as a going concern.”

KiOR Chart 2011 - 2014

KiOR’s problems have repercussions beyond just shareholders and employees.  This isn’t just another high-tech start-up in the renewable fuels world. KiOR was considered the next great thing since sliced bread and in many ways was the cornerstone of advanced renewable fuels policy.  Following is short re-cap of the KiOR story. [click to continue…]