Marlo Lewis

Earlier this week, the Supreme Court heard oral arguments in Utility Air Regulatory Group v. EPA. The case is the first since Massachusetts v. EPA (2007) to examine the extent of the EPA’s Clean Air Act authority to regulate greenhouse gas (GHG) emissions.

The Court is limiting its review to one question:

Whether EPA permissibly determined that greenhouse gas emissions from new motor vehicles triggered permitting requirements under the Clean Air Act for stationary sources that emit greenhouse gases.

In other words, the Court is reviewing the agency’s April 2010 Timing Rule.

According to the Timing Rule, regulation of any air pollutant under any part of the Clean Air Act automatically requires anyone seeking to build or modify a “major” stationary source of that pollutant to apply for a Prevention of Significant Deterioration (PSD) preconstruction permit from EPA or a state environmental agency. The EPA began regulating carbon dioxide (CO2) when its greenhouse gas Tailpipe Rule took effect (Jan. 2, 2011). To qualify for a PSD permit, an applicant must demonstrate that the proposed facility or modification will comply with “best available control technology” (BACT) standards.

Because of the narrow scope of review — the Justices have no intention of revisiting Mass. v. EPA, reviewing EPA’s greenhouse gas Endangerment Rule and Tailpipe Rule, or revisiting the Court’s opinion in American Electric Power v. Connecticut that EPA may adopt new source performance standards (NSPS) to regulate CO2 emissions from stationary sources — some observers conclude that UARG v. EPA is not very important and it really doesn’t matter what the Court decides. Not so.

Because BACT standards are facility-specific, they are more intrusive than NSPS, which apply to industrial source categories. Especially if the regulated “pollutant” is CO2, a byproduct of energy use, BACT is an invitation for bureaucratic micro-management of industrial design and operations. As I discuss in a recent Forbes column:

Because there are no bolt-on commercial technologies to reduce CO2 emissions from industrial processes, BACT for CO2 will consist mainly of facility-specific changes in work practices and equipment to improve energy efficiency. Thus, warns the Energy-Intensive Manufacturers Working Group, a petitioner in the case, BACT for CO2 will empower the EPA and its state counterpart agencies to meddle in “every aspect of a facility’s operation and design that affects either its emission of carbon dioxide or its consumption of energy, because the latter is the primary determinant of the former.” Options listed by EPA include everything from changing light bulbs in the factory cafeteria, to replacing draft fans and water heaters, to basic design changes that, in EPA’s words, “fundamentally redefine the nature” of the facility.

More importantly, overturning the Timing Rule could significantly narrow the scope and slow the pace of EPA regulation of CO2 from industrial facilities.

Consider how long it can take to adopt just one NSPS regulation. EPA committed to adopt CO2 NSPS for new coal-fired power plants and petroleum refineries in Dec. 2010. They still have not even proposed NSPS for refineries. Maybe they’ll finalize the NSPS (“carbon pollution”) rule for new power plants this year. But the rule is beset with legal problems (for example, it is based on the fiction that carbon capture and storage, a technology at least 10 years away from commercialization, has been “adequately demonstrated”). If litigants block the “carbon pollution” rule, then EPA won’t be able to move ahead with CO2 performance standards for existing coal plants.

So here’s the big practical difference. The NSPS route forces EPA to fight for regulatory turf one industry at a time. BACT permitting pursuant to the Timing Rule empowers EPA to impose CO2 regulation on “major” sources throughout the economy in one fell swoop.

The political significance is obvious. If the Court nixes BACT for CO2, EPA will be able to establish far fewer regulatory beachheads between now and Obama’s departure. That would facilitate efforts by future Congresses and the next president to halt or even roll back EPA’s greenhouse gas regulatory agenda. [click to continue…]

Yesterday was the deadline for filing comments with the Office of Management and Budget (OMB) on the Obama administration’s social cost of carbon (SCC) estimates. I submitted a comment letter on behalf of the Competitive Enterprise Institute, Americans for Tax Reform, CFACT, Freedom Action, FreedomWorks Foundation, Frontiers of Freedom, George C. Marshall Institute, Heartland Institute, Rio Grande Foundation, Science & Environmental Policy Project, and Small Business & Entrepreneurship Council.

We argue that carbon’s social cost is an unknown quantity; that SCC analysts can get just about any result they desire by fiddling with non-validated climate parameters, made-up damage functions, and below-market discount rates; and that SCC analysis is computer-aided sophistry, its political function being to make renewable energy look like a bargain at any price and fossil energy look unaffordable no matter how cheap.

One point we emphasize that may come as a complete shock to OMB is that there are potentially very large social costs of carbon mitigation.

Those include:

1. The public health and welfare risks of policies that raise business and household energy costs.
2. The economic, fiscal, and energy security risks of policies that endanger the shale revolution.
3. The economic development risks of policies that limit poor countries’ access to affordable energy.
4. The risks to international peace and stability of impeding developing country economic growth through carbon caps or taxes and carbon-tariff protectionism.
5. The proliferation risks of policies that increase developing country demand for fissile materials and nuclear technology.
6. The risks to scientific integrity when government is both chief funder of climate research and chief beneficiary of “consensus” science supporting a bigger role for government in economic decisions.
7. The risk to the democratic process when governments promote “consensus” climatology to justify bypassing legislatures and marginalizing opponents as “anti-science.”

Here I will excerpt* the discussion addressing point 7 — the risks climate policy poses to democratic self-government.

“Perhaps the biggest casualty [of the global warming movement] is science,” author Rupert Darwall opines. Climate models produce long-term forecasts that cannot be validated in our lifetimes. Inevitably, “consensus” and “expert judgment” displace reproducibility as tests of scientific validity. Government grants and appointments reward researchers whose findings support the consensus. Since the politicians and agencies funding the research and invoking “consensus” are the same ones seeking greater control over energy markets and energy production, researchers face continual pressure or temptation to cross the line between policy relevance and policy advocacy. Groupthink becomes the norm.

A related casualty is the democratic process. The Obama administration’s M.O. is to “enact” climate policies through regulations Congress has not approved and would reject if introduced as legislation and put to a vote. Such policies include the 54 mpg fuel-economy standard, application of best available control technology standards to major stationary greenhouse gas emitters, and a “carbon pollution rule” that effectively bans construction of new commercial coal generation. Administration officials and their allies invoke the “consensus of scientists” to explain why they “can’t wait” for the people’s representatives to act. [click to continue…]

In today’s Wall Street Journal, atmospheric scientists Richard McKnider and John Christy respond to Secy. of State John Kerry’s Feb. 16 pejorative-laden climate change speech in Jakarta, Indonesia.

Kerry lambasted so-called climate skeptics as members of the “Flat Earth Society” for doubting the reality of anthropogenic climate change. He declared, “We should not allow a tiny minority of shoddy scientists” and “extreme ideologues to compete with scientific facts.”

McKnider and Christy note that they “embrace many of the facts” people like Kerry claim they deny (for example, greenhouse gases trap heat in the atmosphere, greenhouse gas concentrations are rising due to industrial emissions). What skeptics deny is that there is solid evidence — scientific or economic — of an impending climate catastrophe. Many also argue that because global economic development is overwhelmingly fossil-fueled, abandoning carbon energy before commercially-viable alternatives are available is perilous and likely a “cure” worse than the alleged disease.

Kerry opines that “climate change can now be considered another weapon of mass destruction, perhaps the world’s most fearsome weapon of mass destruction.” Big picture data suggests otherwise. A century and more of rising carbon dioxide (CO2) emissions and global temperatures has also seen unprecedented improvement in the abundance of human life (population), health (average life expectancy), and per capita income.

Name-calling used to be considered beneath the dignity of the Secy. of State. But if it works for President Obama (“We don’t have time for a meeting the Flat-Earth Society”), who is Kerry to abstain from slinging snark?

The Flat-Earth hypothesis was once the “scientific consensus.” So who’s the real Flat-Earther in today’s climate debate? Someone, like Kerry, who exaggerates the “findings” of flawed climate models, or someone who is skeptical of climate models because of their growing failure to replicate climate reality?

McKnider and Christy post a chart that is one those pictures worth a thousand words.

If you want to reduce greenhouse gas emissions and oil spill risk, you should support the Keystone XL Pipeline.

Last week the State Department issued its Final Supplemental Environmental Impact Statement (FSEIS) for the Keystone XL Pipeline. Environmental activists are outraged.

Before construction can begin, State must determine that the proposed 875-mile pipeline serves the “national interest” and grant a “Presidential Permit” to builder-owner-operator TransCanada Corporation. Green pressure groups have pushed President Obama to base the national interest determination on a single issue — whether Keystone XL would increase incremental greenhouse gas emissions above the no-project baseline.

Keystone foes assumed this single-factor test would give them a slam dunk. How could expanding petroleum infrastructure not increase oil production, consumption, and the associated greenhouse gas emissions?

The FSEIS, however, concludes that Keystone XL is “unlikely to significantly affect” the rate of Canadian oil sands development. Most U.S. refineries are “optimized” to process heavy crudes such as those imported from Latin America, the Mideast, and Canada. If the Presidential Permit is denied, delivery via rail lines, tankers, barges, and other pipelines will increase, and roughly the same amount of Canadian crude will reach U.S. refineries.

Rail transport of Canadian oil, for example, has increased from practically zero barrels per day in January 2011 to 180,000 bpd in November 2013. Rail loading facilities in the Western Canadian Sedimentary Basin currently have a capacity of 700,000 bpd, and by year’s end capacity is expected to exceed 1.1 million bpd.

Here’s the kicker. Those other modes of delivery also produce greenhouse gas (GHG) emissions. Total annual GHG emissions associated with alternative delivery scenarios are 28% to 42% greater than those for the proposed project.

What about oil spill risk, another common complaint of Keystone opponents? [click to continue…]