Marlo Lewis

Which State in the lower 48 has the highest gas prices? You probably already know the answer. But today’s gas price map on GasBuddy.com is too pretty not to share with visitors to this blog.

The long-reigning, undisputed champion of pain at the pump is (drum roll . . .) the State with the most ‘progressive’ energy and climate policies.

Source: GasBuddy.Com

EPA’s Clean Power Plan (CCP) would set carbon dioxide (CO2) performance standards for state electric power sectors. The standards are calibrated in pounds CO2 per megawatt hour. They translate into statewide emission-reduction mandates or caps. On average, states would have to reduce their power-sector CO2 emissions 30% below 2005 levels by 2030.

Under §111 of the Clean Air Act (CAA), a performance standard, whether for new or existing sources, must reflect the “best system of emission reduction” (BSER) that has been “adequately demonstrated,” taking “cost” into account.

Performance standards must also be “achievable,” defined by the D.C. Circuit Court of Appeals to mean achievable by the regulated industry as a whole (National Lime Association V. EPA, 627 F. 2d 416 at 443 [1980]).

Finally, before EPA may promulgate “existing source performance standards” (ESPS), as it proposes to do through the CPP, the agency must first promulgate new source performance standards (NSPS), as it proposes to do through the Carbon Pollution Standards rule.

State policymakers should have no legal qualms about refusing to comply with the CPP. EPA’s proposal is unlawful on at least 10 counts.

(1) CAA § 111(d) prohibits EPA from requiring ESPS for sources already regulated under §112. EPA has been regulating power plants under §112 since December 2011, when the agency finalized the Mercury Air Toxics Standards (MATS) rule. Therefore, the very provision under which EPA proposes to establish performance standards for existing power plants prohibits the agency from doing so.

(2) A state’s electric-power sector is not a “source” to which a performance standard may lawfully be assigned. Unlike all previous §111 performance standards, which, pursuant to the statute, apply to “particular sources,” CPP proposes to cap emissions from each state’s entire electric-power sector. CAA §111(a)(3) defines “stationary source” (whether new or existing) as “any building, structure, facility, or installation which emits or may emit any air pollutant.” Obviously, a state’s power sector is not any such individual physical object.

(3) A “best system of emission reduction” (BSER) is a technology or set of technology options “adequately demonstrated” for “designated facilities,” not a green wish-list of market-restructuring energy policies Congress has repeatedly declined to approve. Nothing in the statutory text, EPA’s implementing regulations, or past practice indicates that EPA may control state policies regarding renewable energy, electricity dispatch, or demand management.

(4) A BSER for CO2 emissions from existing power plants does not exist. Commercial technology to capture or filter CO2 emissions from existing power plants has not yet been developed, as EPA admits. Hence there is no “best system of emission reduction” on the basis of which EPA or states could set CO2 performance standards for existing power plants. [click to continue…]

As previously discussed on this blog, the EPA recently challenged a key conclusion of the State Department’s Final Supplemental Environmental Impact Assessment (FSEIS) on the Keystone XL Pipeline (KXL).

State concluded that denying approval of the KXL would actually increase net greenhouse gas (GHG) emissions. Canadian crude would still reach U.S. refiners, it would just come by alternate modes of delivery (principally rail transport) that are more carbon-intensive than the proposed pipeline. The alternate routes would emit 28% to 42% more carbon dioxide (CO2) per barrel of oil delivered (FSEIS, ES-34).

That assessment was intolerable to Keystone haters, and last week EPA came riding to their rescue.

EPA argued that State’s GHG impact assessment assumes crude oil prices remain at $75 per barrel or higher. When oil prices fall into the $65-$75 range, State acknowledged, the additional cost incurred to transport crude by rail could make new oil sands development projects uneconomical. Thus, EPA reasoned, with crude prices now hovering around $50 per barrel, building the KXL could make uneconomic oil sands projects commercially viable, increasing oil sands development and the associated emissions beyond what would otherwise occur.

As noted in my previous post, EPA did not accurately describe State’s analysis. State did not opine that blocking the KXL by itself would render oil sands development uneconomical in a period of low oil prices. Rather, State opined that the higher cost of rail transport would constrain oil sands development if “all new and expanded Canadian and cross-border pipeline capacity, beyond just the proposed Project, is not constructed” (FSEIS, ES-12, emphasis added).

Yesterday, TransCanada, the corporation seeking to build the KXL, sent a letter to State rebutting EPA’s critique. In a nutshell, TransCanada argues, quoting the FSEIS, that the “dominant drivers of oil sands development are more global than any single infrastructure project,” pointing out that both Canadian and U.S. Bakken crude production increased since late 2008, despite crude oil prices falling below $75 per barrel during most of December 2008-December 2009.

From TransCanada’s letter (footnotes removed):

In updating the market assessment and related conclusions . . . the Department should take note that history has demonstrated short- and medium-term fluctuations in oil prices do not significantly impact whether the oil sands resource will be developed. When TransCanada applied for approval of the Project in late 2008, the price of oil closed around $41 per barrel. Today the price is approximately $50 per barrel and over that period of time the price of oil has ranged between $110 per barrel and $39 per barrel. Over that same period of time, Canadian oil sands production has grown from 1.2 million barrels per day to 2.1 million barrels per day, an increase of 0.9 million barrels per day or 1.2 times the capacity of the Project. In addition, over that period of time, US Bakken crude oil production has grown from 0.25 million barrels per day to 1.1 million barrels per day, an increase of 0.9 million barrels per day or nine times the capacity of TransCanada’s Bakken Marketlink Project. It is clear that building or not building the Project will not cause crude oil production to go up or down. [click to continue…]

The State Department’s Final Supplemental Environmental Impact Statement (FSEIS) on the Keystone XL Pipeline vexes environmentalists. While acknowledging that petroleum made from Canadian oil sands emits 17% more CO2 than other types of heavy crude (FSEIS, ES-15), State concluded that U.S. refiners would obtain roughly the same amount of Canadian crude whether permission to build the pipeline is granted or denied.

If denied, the oil would just come by alternate modes of delivery, principally trains but also incremental pipelines and barges. Those other routes are not only more costly but also less energy efficient than transport via the proposed KXL. Thus, State concluded, compared to the KXL, transport by rail would emit 28% to 42% more CO2. [FEIS, ES-34] Implication: If you’re really worried about global warming, then you should support the Keystone XL Pipeline. Beautiful!

In a letter sent Monday Feb. 2, EPA Assistant Administrator for Enforcement and Compliance Assurance Cynthia Giles asked State to revisit that assessment. State estimated that as long as crude oil sells for $75 per barrel or higher, “revenues to oil sands producers are likely to remain above the long-run supply costs of most projects responsible for expected levels of oil sands production growth.” [FEIS, ES-12]. Producers would still earn profits notwithstanding the extra cost – roughly $8 per barrel — to ship the oil by rail rather than through a big new pipeline.

Times have changed, Giles argues. State published its FSEIS in January 2014, when West Texas Intermediate (WTI) crude sold at about $94 per barrel. In recent weeks, WTI crude has been selling below $50 per barrel.

Giles quotes State’s conclusion that if oil prices decline to $65-$75 per barrel, the higher transport costs of shipment by rail “could have a substantial impact on oil sands production levels — possibly in excess of the capacity of the proposed project.” Indeed, State goes on to say,  “Prices below this [$65-$75] range would challenge the supply costs of many projects, regardless of pipeline constraints, but higher transport costs could further curtail production.” [FSEIS, ES-12]

Giles concludes: “In other words, the Final SEIS found that at sustained oil prices within this range, construction of the pipeline is projected to change the economics of oil sands development and result in increased oil sands production, and the accompanying greenhouse gas emissions, over what would otherwise occur.” She advises State to give “additional weight” to the “low price scenario” in the FSEIS “due to the potential implications of lower oil prices on project impacts, especially greenhouse gas emissions.”

Allow me to translate. The future of Canada’s oil sands industry may have looked bright a year ago. Today that future is clouded by falling prices and profit margins. A long period of low prices could force a large contraction and throw tens of thousands of people out of work. So let’s kick ‘em while they’re down! Let’s deny oil companies the option to invest their own money to cut operating expenses, protect their capital investment, or just plain survive.

To opponents, the Keystone XL Pipeline is objectionable precisely because it will increase the economic efficiency of an industry they believe should not exist. [click to continue…]

“FutureGen to be shut down after feds withdraw $1B in funding,” reads the title of an AP story published yesterday afternoon. This news is significant for the future of U.S. energy policy:

1. FutureGen’s financial unsustainability further debunks EPA’s mythos that carbon capture and storage (CCS) is an “adequately demonstrated” technology.
2. If CCS is not adequately demonstrated, then EPA’s Carbon Pollution Standard rule is unlawful.
3. If the Carbon Pollution Standard rule is unlawful, then so is the far more consequential regulation predicated upon it — the Clean Power Plan.

Here are some key excerpts from the AP story:

Coal companies working with the government on the long-planned $1.65 billion FutureGen clean-coal project said Tuesday they have no choice but to shut it down after the Department of Energy suspended the majority of its funding.

The department confirmed that it will not provide the $1 billion in stimulus funding it had committed to the project, which aimed to refit a coal-fired power plant near Meredosia in western Illinois and store carbon dioxide from the coal underground.

The FutureGen Alliance, the companies working on the project in western Illinois, said they were disappointed by the news but had no way to make up the money.

“The federal funding was the key component,” FutureGen Alliance spokesman Lawrence Pacheco said, adding that the Department of Energy told the alliance that the project couldn’t realistically use the federal stimulus funds by the September deadline to do so.

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World Resources Institute (WRI) has published a report that is likely to put the food vs. fuel issue back in play as the 114th Congress considers options to reform the Renewable Fuel Standard (RFS) program.

In Avoiding Bioenergy Competition for Food Crops and Land, authors Tim Searchinger (Princeton University) and Ralph Heimlich argue that “any dedicated use of land for growing bioenergy inherently comes at the cost of not using that land for growing food or animal feed, or for storing carbon.”

From the report’s key findings:

Dedicating crops and/or land to generating bioenergy makes it harder to sustainably feed the planet.

• The world needs to close a 70 percent “food gap” between crop calories available in 2006 and those needed in 2050. If crop-based biofuels were phased out by 2050, the food gap would shrink to 60 percent. But more ambitious biofuel targets—currently being pursued by large economies—could increase the gap to about 90 percent.
• Wider bioenergy targets—such as a goal for bioenergy to meet 20 percent of the world’s total energy demand by 2050—would require humanity to at least double the world’s annual harvest of plant material in all its forms. Those increases would have to come on top of the already large increases needed to meet growing food and timber needs. Therefore, the quest for bioenergy at a meaningful scale is both unrealistic and unsustainable.

Figure 4 from the report makes the latter point — that biomass cannot supply more than a small fraction of global energy without courting disaster — stunningly clear:

 Another key finding explains why. [click to continue…]

“2014 was the planet’s warmest year on record,” President Obama proclaimed in his State of the Union speech. Obama cited the separate findings of two federal agencies, NASA and NOAA, which announced Jan. 16 that, “The Year 2014 ranks as the warmest since 1880.” To Obama, the record-breaking year is evidence Congress and the American people should rally round EPA’s greenhouse gas regulations.

When will the spinning end?

In the first place, 2014 might not be the warmest year in the instrumental record. NASA and NOAA’s analyses are based on data from thousands of land- and sea-based weather stations.

As is well-known, surface station records have many gaps (both spatial and temporal) and many quality-control issues. Moreover, they do not measure temperature in the troposphere — a more reliable indicator of atmospheric heat content and the greenhouse effect.

According to NOAA, the 2014 temperature in the troposphere was the third highest in the 1979-2014 record, as analyzed by the University of Alabama Huntsville (UAH) satellite program, and the sixth highest on record, as analyzed by the Remote Sensing Systems (RSS) satellite program.

So why don’t the agencies’ press releases proclaim 2014 the third or sixth warmest year? Or just say that it was one of the warmest in the instrumental record? Perhaps because “warmest on record” feeds the sense of crisis, which helps feed agency budgets. Notice the self-promotional aspect of NASA’s press release: “The observed long-term warming trend and the ranking of 2014 as the warmest year on record reinforces the importance for NASA to study Earth as a complete system, and particularly to understand the role and impacts of human activity.”

[click to continue…]

Award-winning science writer Matt Ridley this week published an essay full of uncommon common sense titled “My life as a climate lukewarmer.”

In general, I would describe a ‘lukewarmer’ as someone who:

• Thinks anthropogenic climate change is real but very far from being a planetary emergency.
• Takes due notice of the increasing divergence between climate model predictions and observations and the growing body of scientific literature challenging IPCC climate sensitivity estimates.
• Regards the usual pastiche of remedies — carbon taxes, cap-and-trade, renewable energy quota, CO2 performance standards — as either an expensive exercise in futility or a ‘cure’ worse than the alleged disease (depending how aggressively those policies are implemented).
• Is impressed by — and thankful for — the immense albeit usually unsung benefits of the CO2 fertilization effect on global agriculture and green things generally.
• Recognizes that poverty remains the world’s leading cause of preventable illness and premature death.
• Understands that plentiful, affordable, scalable energy (most of which comes from CO2-emitting fossil fuels) is essential to poverty eradication and progress towards a healthier, safer, more prosperous world.

As moral philosopher Alex Epstein recently put it, fossil energy companies did not take a safe climate and make it dangerous. They took a dangerous climate and made it vastly safer.

For too long many in the GOP have been hoodwinked by folks like Al Gore, Greenpeace, and the UN climate glitterati into believing the key issue is whether climate change is “real.” Gore et al. would have us believe that if we accept the reality of climate change, we must also agree that global warming “threatens the survival of civilization and the habitability of the Earth,” hence that our only moral choice is to embrace their agenda of coercive de-carbonization via centralized eco-energy planning.

Consequently, many GOP politicians and activists assume that to defend the economy and oppose regulatory excess, they must deny, or at least question whether, there is any evidence linking the long-term rise of greenhouse gas concentrations with the (moderate and non-alarming) increase in global temperatures since the 1880s.

That, alas, is exactly what the warming movement wants its opponents to say, not only because it makes them look “anti-science,” but also because it tacitly affirms the alarm narrative. As if all we have to do is assent to the virtual tautology that rising greenhouse gas concentrations have a greenhouse (warming) effect, and we are compelled to concede every important scientific, economic, and moral point in a very complex debate.

[click to continue…]

The State of the Union speech? Yeesh. The energy and climate stuff was disingenuous and dumb.

“The State of the Union is strong,” President Obama proclaimed. How so? Among other things, “we are as free from the grip of foreign oil as we’ve been in almost 30 years.” Domestic production is “booming” and today “America is number one in oil and gas.” Obama implied his policies had something to do with those achievements. Ridiculous.

The fracking revolution took place almost entirely on state and private lands, over which federal agencies exercise scant control.

Tax a thing, and you get less of it. Rather than encourage oil and gas production, each year Obama sent Congress a budget proposal calling for tax hikes on the oil and gas sector. The President’s FY 2015 budget, for example, proposed to increase oil industry taxes by $44.838 billion. It also advocated repeal of LIFO (last-in, first-out) accounting rules — a policy change that would cost oil companies and other U.S. firms $82.708 billion.

The Obama administration’s signature oil policy was its moratorium and informal “permitorium” on offshore oil production following the April 2010 BP Macondo well explosion and oil spill in the Gulf of Mexico. API estimated the moratorium depressed oil industry capital and operating expenditures by $18.3 billion during 2010-2012 and would cost the U.S. economy $28 billion in lost investment over the next several years. The official and de-facto moratoria cut Gulf of Mexico production by 77 million barrels in FY 2011 (13%) and 47 million barrels in FY 2012 (9%), according to the Institute for Energy Research.

Then there’s the President’s proposal to cut methane emissions from the oil and gas sector by 40-45% below 2012 levels by 2025. If there ever was a ‘solution’ in search of a problem, this is it. As Cato Institute scientists Patrick Michaels and Chip Knappenberger point out, methane emissions from the sector fell by more than 10% since 2008, chiefly for economic reasons. Methane is a form of natural gas, so frackers have a financial incentive to plug leaks and capture fugitive emissions. 

Moreover, far from being ‘worse than we thought,’ atmospheric methane concentrations are increasing more slowly than previously predicted. Indeed, the IPCC has lowered its methane concentration prediction three times since 1990. Yet even the lower bound of its most recent (2007) prediction overshoots observations. The chart below is from the leaked second order draft of the IPCC’s Fifth Assessment Report (AR5):

Using EPA’s own policy model, Michaels and Knappenberger calculate that the administration’s proposed methane cuts “will avert a whopping 0.002°C of global warming by century’s end.” Even if fracking-related methane emissions endangered public health and welfare (they don’t), Obama’s policy is all cost for no benefit.

Okay, on to the dumb stuff. Obama declared that “no challenge — no challenge — poses a greater threat to future generations than climate change.” Time for a restatement of the obvious. [click to continue…]